Never underestimate the power of landlords…
In a business workout, clients frequently lose sight of the fact that there are other important parties beyond secured creditors (or those with UCC’s filed). In more than one scenario that I’ve been involved in, emotional landlords that have been burned and are unwilling to play ball with the solution we are working towards have attempted to blow up an entire deal. They accomplish this by filing for restraining orders against the assets currently residing in their property, or by blocking the transfer of a lease to a new investor. The common logic that “do they want a tenant or a vacancy?” when working with a landlord doesn’t always add up. If there’s an operating business, in which people are moving in and out of the doors, spending money, and the landlord is not getting paid… of course there’s going to be some bad blood. The lesson learned from these situations is that you MUST INCLUDE THE LANDLORD on a business workout from the very beginning. Treat them as if they have a UCC, inform from the get-go that their tenant is likely to die soon and if possible, we’re going to find a buyer of the business to assume the lease. If this doesn’t occur, the possibility exists for shit to hit the fan at the most inopportune moment.
