The hotel portfolio contains 3,538 rooms and includes eight Embassy Suites hotels, the Hilton Cincinnati Airport and the Chicago Marriott Southwest at Burr Ridge. The average room rate across the portfolio is $126 and occupancy is 75.4% on a trailing 12-month basis. Revenue per available room is up 7.1% year over year.

The value of the hotels has fallen considerably since AREA Property Partners purchased Eagle Hospitality in 2007.  Because of this decline, Eagle was unable to refinance the $606 million mortgage, which came due on Sunday.

Blackstone, which purchased the debt at a discount last May from the Federal Reserve-controlled entity overseeing the assets of Bear Stearns, could have commenced foreclosure following the maturity of the loan. Instead, they elected to allow the borrower to sell the properties and pay off the loan at a discount.

Illinois and Ohio are both judicial foreclosure states, where the foreclosure process tends to average around 18 months.  In judicial states in particular, Lenders will often work to find a compromise with borrowers, if possible, rather than resort to foreclosure, which is not only time consuming but can be costly as well.

Paulson and Winthrop took control of the four properties (along with the Doral Golf Resort & Spa in Miami, which was later sold to Donald Trump) in early 2011, after then-owner Morgan Stanley failed to refinance the $1.5 billion in maturing debt on the properties because of a decline in value and cash flow from the resorts amid the recession.

Shortly thereafter, Paulson commenced bankruptcy proceedings to shield the properties from creditors while it worked to sell assets and pay down the debt. Around that time, Paulson entered into a standstill agreement with lenders led by the Singapore sovereign wealth fund, known as GIC, pursuant to which it pledged to refinance the debt and pay off the lenders by September 1 of this year.

GIC now alleges that the owners missed an August 1 interest payment, which triggers an auction of the properties by year-end.  As a lender with close to $400 million in mezzanine debt, GIC is likely to bid aggressively at the auction, according to the Journal article.

Paulson is looking to hold on to the properties and has been working with Five Mile Capital Partners to find new partners to contribute a total of approximately $400 million in equity, along with debt, to pay off the existing creditors, according to the article in the Journal.

Read the full Wall Street Journal article here (subscription required).

Under traditional principles of equity in Delaware, a manager of an LLC owes fiduciary duties of care and of loyalty to the company and the members; however, the Delaware statutes expressly allow for those duties to be limited or extinguished. There is also an implied covenant of good faith and fair dealing that governs all contracts, and that duty can not be eliminated — but it can be limited or, at least, fleshed out. More on this later.

Fiduciary Duties of Loyalty and Care

What is a fiduciary duty? Generally, it is a duty that one party owes to another because of a special relationship, often where one party has entrusted another with the ability to manage certain affairs on its behalf. For example, fiduciary duties exist between attorney and client, between partners in a partnership and between corporate officers and shareholders. In the corporate law context, courts have recognized fiduciary duties of loyalty (to act in good faith and in the best intersts of the corporation and not to engage in self-dealing) and care (to act prudently in light of all available information).

Of course, this is a very cursory summary of the concept of fiduciary duty under corporate law. For purposes of this article, it is important only to understand that under Delaware law, the persons charged with managing a company can have liability to the company for failing to fulfill fiduciary duties. These duties can be, and often are, eliminated or substantially circumscribed in real estate joint venture agreements. However, recent developments in Delaware case law affect how this can be effectively accomplished.

Implied Covenant of Good Faith and Fair Dealing

The implied covenant of good faith and fair dealing is an implied agreement between the parties to every contract that they will not act unreasonably or arbitrarily to prevent the other party from receiving the benefits that they bargained for. The covenant is deemed to exist in every contract even though it is not expressly stated. It is used by courts in Delaware as a so-called “gap-filling” measure to address developments that could not have been anticipated at the time the contract was signed.

The Delaware LLC Act

There are two provisions of the Delaware Limited Liability Company Act (the “LLC Act”) that provide the basis for minimizing the liability of managers in real estate joint ventures.

Section 18-1101(c) of the LLC Act provides that the provisions of an LLC agreement may expand, restrict or eliminate any duties that a manager has to the company or to the other members, except the implied covenant of good faith and fair deal may not be eliminated.

Similarly, Section 18-1101(e) of the LLC Act provides that an LLC agreement may provide for the limitation or elimination of any and all liability of a manager, both for breach of contract and breach of any duty, except the agreement may not limit or eliminate liability for a bad faith violation of the implied covenant of good faith and fair dealing.

Recent Delaware Law Decisions

We turn now to two recent Delaware law decisions that affect the limitation of liability of managers of limited liability companies. The first relates to the provisions in the LLC Act that permit the members of an LLC to eliminate fiduciary duties of managers (or managing members), as outlined above. The second relates to the implied covenant of good faith and fair dealing, which the LLC statute specifically excludes from the types of manager liability that can be extinguished.

On January 27, 2012, the Delaware Chancery Court handed down a decision in Auriga Capital Corp. v. Gatz Properties, Inc. In that opinion, the court explains the interplay between common law fiduciary duties and the provisions of the LLC Act outlined above.

Prior to this decision, it was not entirely clear whether managers of an LLC owe fiduciary duties to the company and the other members by default, i.e. whether those duties exist when the LLC agreement neither expressly imposes the duties nor expressly eliminates them. In the Auriga decision, it was made clear that they do.

The court held that a manager of an LLC by default owes traditional fiduciary duties of loyalty and care to the other members unless the LLC agreement expressly modifies or eliminates those duties. So unless the LLC agreement clearly eliminates the fiduciary duties of a manager, the manager could be found liable for breach of a fiduciary duty.

While Auriga was not the first case to find that an LLC manager had fiduciary duties by default, it is notable for its extensive analysis of the statute and the clarity of its reasoning. After Auriga, there is little doubt that unless you clearly set forth limitations on liability in your joint venture agreement, you risk liability for breach of fiduciary duty as a manager or managing member of an LLC.

Turning now to the second recent Delaware decision, the Chancery Court’s decision on April 4, 2012 in In Re K-Sea Transportation Partners LP Unitholders Litigation involved, among others things, a claim of breach of the implied covenant of good faith and fair dealing. While this decision involved a limited partnership and not an LLC, the Limited Partnership Act provisions at issue are identical to the LLC Act provisions set forth above, so a similar analysis could be applied in the LLC context.

That case involved the merger of a publicly-traded Delaware limited partnership into a non-affiliated third party. In connection with the merger and apart from the acquisition price, there was a separate payment to the general partner of the LP being acquired, in exchange for certain interests that it held exclusively, which the limited partners claimed was excessive.

Because of the apparent conflict of interest, the transaction was reviewed by a committee of independent directors who approved the deal, relying on a fairness opinion from an investment bank.

The plaintiffs claimed the committee was not truly independent and that the general partner breached its fiduciary duties.

In granting the defendants’ motion to dismiss, the court addressed whether there could have been a breach of the implied covenant of good faith and fair dealing, given the facts and in light of particular language in the limited partnership agreement. That language provided that the general partner would be presumed to have acted in good faith if it relied on the advice of an expert as to any matter reasonably believed to be within such expert’s area of competence.

Since there was no allegation that the approval of the merger was outside of the investment bank’s area of competence, the general partner was entitled to the presumption that it acted in good faith, since it relied on the advice of the investment bank.

The court then addressed the question of whether there could be an allegation of breach of the implied covenant of good faith and fair dealing where the limited partnership agreement afforded the general partner the conclusive presumption that it acted in good faith. The court answered that question in the negative and cited a case with similar facts from earlier in the year (Gerber v. Enter. Prods. Holdings, LLC):

“Under the plain terms of the LPA, the general partner is protected from any claims asserting that the action was taken other than in good faith. That would include good faith claims arising under the duty of loyalty, the implied covenant, and any other doctrine. In contrast to this broad pronouncement, our Supreme Court has determined that the implied covenant is a gap-filler, and may not be used to ‘infer language that contradicts a clear exercise of an express contractual right.’ Moreover, our Supreme Court has repeatedly stated that ‘one generally cannot base a claim for breach of the implied covenant on conduct authorized by the agreement.’

“The drafters of the LPA foresaw that claims against the general partner asserting a failure to act in good faith could arise in a number of circumstances. The drafters decided that none of those claims could be asserted if the general partner acted in reliance upon the opinion of an expert. Under the LPA, the general partner has an ‘express contractual right’ to rely upon the opinion of an expert. The Court may not ‘infer language that contradicts a clear exercise’ of that right.” (edited for clarity)

So while it is not possible to eliminate, or limit liability for a breach of, the implied covenant of good faith and faith dealing, it is possible to establish a conclusive presumption of good faith. Doing so can create a safe harbor and protect managers from claims of breach of the implied covenant.

The proposal, being pitched to municipalities by advisory firm Mortgage Resolution Partners, could generate returns to investors of up to 30% and billions of dollars in fees for bankers, according to the Journal article.

Under the proposal, the municipalities would seize underwater but performing home mortgage loans that have been securitized, paying prices up to 25% below the appraised value of the homes. The homes would then be refinanced at close to 98% of their value, with the difference going to pay transaction costs, the advisory firm’s fees and a healthy return to investors.

The proposal has come under fire from financial trade groups who believe it doesn’t satisfy the public use requirement of eminent domain.

“The U.S. Constitution’s eminent domain powers were not intended for the cherry-picking of performing loans to create exorbitant profits for private investment funds like MRP,” Tom Deutsch, executive director of the American Securitization Forum told the Journal.

Critics also argue that the program could have unintended consequences such as increasing the cost of credit and worsening the housing crisis rather than improving it.

Bondholders are understandably concerned that they will be forced to sell to municipalities at a steep discount.

Indeed, it is unclear how the proposal would be justified under the doctrine of eminent domain, which in addition to requiring a public purpose, would also mandate that the bondholders receive “just compensation”, generally interpreted as fair market value. Proponents of the plan presumably must demonstrate that the fair market value of the mortgages — which would be performing — is equal to only 75% of the value of the collateral that secures them.

1. Waterfall/Distributions

As discussed in last week’s installment, the calculation of the purchase price for the partnership interests under the buy-sell often involves starting with a theoretical purchase price for all of the assets of the venture and then running it through the distribution waterfall to determine the amount that each partner would receive in a sale of the partnership assets at the named price.

The partners may not agree on how the waterfall is applied. For example, if the venture has not kept complete and accurate records of all capital contributions and partner loans, there could some dispute as to who is due what. Any disagreement about the application of the waterfall will need to be resolved before the buy-sell can close. If your partner wants to delay the execution of the buy-sell, it may be possible for them to dispute the application of the waterfall.

Before commencing the buy-sell procedures, it is important to understand how the purchase price is calculated, how the distribution waterfall works and how much room for disagreement there might be in applying the waterfall as required by the buy-sell provisions.

2. Interim Management

The buy-sell procedure may trigger a change in who controls the management of the joint venture. For instance, sometimes the terms of the buy-sell will provide that once it is determined which partner will be the buyer, that partner will be given the exclusive power to control the day-to-day management of the company.

This aspect of the buy-sell could be a crucial factor in your buy-sell strategy. If you are a non-managing partner with major decision rights only and no control over the day-to-day management of the venture, exercising the buy-sell could give you the opportunity to take action, make changes or gain insight into the management and operations of the venture. On the other hand, if you are the managing partner you may be wary of losing that day-to-day control during the pendency of the buy-sell.

3. Assignment of Assets/Transfer of Files

Even as you are paying close attention to all of the terms of the buy-sell, equally as important may be what is *not* included in the buy-sell. If you are the buyer, it is important that you get everything you need to operate the venture.

Often most, if not all, of the assets used in the venture’s business will be owned by the joint venture entity itself and will not need to be separately assigned. However, there could be assets that are in the name of one of the partners or an affiliate, for example, permits, vehicles, equipment, alcoholic beverage licenses, service contracts or any number of other assets needed to run the business. The buy-sell provision may or may not contemplate the separate assignment of these items, but it is important to account for them one way or another.

In addition, possession of all of the books and records and other files relevant to the business of the venture must be transferred to the buyer. The buy-sell may not provide for the transfer of files, but you may find yourself without necessary documents and little leverage to demand them if you do not address this issue at the closing of the buy-sell.

Before triggering a buy-sell, consider these six factors so that you will be better prepared for the events that may follow.

Before turning to those considerations, let’s clarify what exactly a buy-sell provision consists of.

A buy-sell provision provides a method for participants in a joint venture to part ways under certain circumstances, one of which can be a disagreement among the partners or a deadlock over a major decision. The method of separation usually consists of an “I cut, you choose” proposition, where one partner names a price and the other partner decides whether to be a buyer or a seller at that price — that is, whether to buy the other partner’s interests in the venture and become the sole owner or to sell it’s interest to the other partner and exit the venture.

Since the partners often will not own the same percentage of the company, and since there may be other factors affecting the value of each partner’s interest (such as a right to priority distributions or a promoted interest on the back-end), the respective ownership interests of the two partners may not be equal in value. Therefore, the price named at the outset of the buy-sell procedure could be an aggregate value for all of the assets of the venture, rather than a purchase price for one partner’s interest in the venture. That aggregate value is then used to determine the purchase price for each partner’s interest by calculating the amount that each partner would have received in a hypothetical sale of all partnership assets for the aggregate price named at the outset of the buy-sell procedure.

There are many variations of the buy-sell provision and many elements to consider when drafting and negotiating a buy-sell provision; however, here we are looking at what to consider before triggering an existing buy-sell. When you open up your partnership documents to read the buy-sell provision (or have your lawyer do it), what should you look for and what questions should you ask?

1. Litigation Outlook

Perhaps the most important consideration from a legal standpoint is the litigation landscape. If you are considering invoking the buy-sell, chances are that a consensual resolution has not been feasible. There exists some disagreement or dispute, so litigation is a possibility.

Possible bases for litigation include whether the pre-conditions to triggering the buy-sell have been met. This is not an issue if the buy-sell can be freely invoked, perhaps after an initial lock-out period. But sometimes the documents may require, for example, that a major decision deadlock exist before the buy-sell can be tripped. How is a deadlock defined? Are the parties obligated to negotiate in good faith? Is there some other condition that must be met, such as some wrong-doing by the other partner? Where such conditions exist there is a potential basis for litigation, and where there is a subjective standard, such as the requirement to negotiate in good faith, there is a fact-intensive issue that could be costly and time-consuming to litigate.

There may be a number of other potential pitfalls throughout the buy-sell provision. Look for subjective standards like an obligation to be reasonable or to act in good faith. For example, if your partner has provided any guaranties, you may be required to use good faith efforts to have them released from the guaranties in the event they are the seller. This may be difficult to do, and if you are not successful, your partner could, rightfully or not, question whether the steps you took constituted good faith efforts.

These are just a few examples of the many issues that could lead to litigation. It is important to be mindful of the language in the documents and the conduct of the parties to consider what issues might arise. Once you identify the issues, you can consider the merits of potential claims along with the relative motivations and leverage of the parties. What is the process likely to cost you in the end and what is it likely to cost your partner? What does each party stand to lose or to gain and what resources is each party willing to expend to prevail?

2. Remedies and Consequences of Default

When reviewing the buy-sell provision, pay particularly close attention to what happens when a partner defaults in its obligation to close. Is the partner who elects to buy required to post a deposit? If so, in what amount and who holds it? Is a defaulting partner liable to the other for damages or are the remedies limited to specific performance or return/retention of the deposit? Are there other penalties for default, such as the opportunity to buy the defaulting partner’s interest at a discount or the loss of the defaulting partner’s voting rights?

Knowing the answers to these questions will help you prepare for what lies ahead. You may be required to put up substantial sums as a deposit early on in the process, and those monies could become tied up in litigation. You may stand to lose your voting rights if there is some hiccup that prevents you from closing.

On the other hand, there may not be sufficient remedies to compel your partner to perform. If no deposit is required, the buy-sell can become a mechanism for nuisance lawsuits and delay with no risk of financial loss to deter default. Make sure you understand the consequences to both you and your partner of a failure to close.

3. Release/Replacement of Guarantors

If one partner or its affiliate has provided guaranties or environmental indemnities on behalf of the venture, the other partner may be required to obtain, or attempt to obtain, the release of the guarantor from the obligations of the guaranties or instead provide an indemnity from any obligations that may arise under the guaranties in the future. This requirement comes into play when the partner that has provided the guaranties becomes the seller under the buy-sell. Since selling partner will no longer be involved in the project, the buy-sell provision often provides that the buying partner take on any future risk of liability under the guaranties.

This aspect of the buy-sell warrants special consideration. If your partner has provided guaranties, you may be required to procure the release of the existing guarantor in the event you are the buyer, which may be difficult if the lender is not required to accept a replacement guarantor, especially if the loan is securitized. Even if you are required only to use good faith efforts to obtain the release, this could serve as the basis for litigation as discussed above.

You also may be required to furnish an individual or entity with substantial assets to either serve as a replacement guarantor or to provide an indemnity to your partner to protect them from any liability under the guaranties that may arise in the future. The prospect of having to assume significant contingent liabilities may effect your decision of whether or not to trigger the buy-sell.

Next week, in Part 2 of this series, we will discuss three more considerations to take into account when triggering a buy-sell in a partnership dispute.

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^{1. The use of the terms “partnership” and “partner” in this article refer to any joint venture and its participants, regardless of form. The concepts discussed are the same whether the joint venture is organized as a partnership, a limited liability company, a corporation or any other form of business association.}

Generally, the legal doctrines covered in the oral modification series — part performance, waiver, promissory estoppel and equitable estoppel — will apply to statements made in emails as well as to oral statements. So just as an oral statement may modify a contract, even in the face of a “no oral modification” clause, an email may also modify a contract if one of the four doctrines above is invoked.

However, there is an additional consideration when emails are involved. In certain instances, the email itself will be deemed to constitute a signed written agreement. In those cases, there is no need to apply any of the four doctrines above, because the email alone operates to modify the agreement just as a signed written amendment would.

In the 2008 case of Stevens v. Publicis, S.A., the court established that an email could satisfy a no oral modifications clause. So even if a contract contains a provision that prohibits oral modifications and mandates that all amendments be signed and in writing, the contract could be capable of being modified by an email, even if none of the four doctrines above was applicable.

Prior to the Stevens case, the law allowed for binding contracts to be entered into electronically, including by email. Many states have even adopted statutes to that effect. Courts had also found that emails could constitute a signed writing for purposes of statutes that require certain types of agreements to be in writing.

However, it was in Stevens v. Publicis that it was definitively decided that an email or series of emails could satisfy a no oral modifications clause.

That case involved an employment agreement pursuant to which appellant Arthur Stevens was to act as chairman and CEO of a subsidiary of respondent Publicis, S.A. for a period of three years. The agreement contained a no oral modifications clause.

Stevens was removed as CEO because of poor financial performance of the subsidiary. A new role for Stevens at the company was proposed by a representative of the company and accepted by Stevens in a series of emails.

The trial court found that the parties had agreed in writing to modify the employment agreement. On appeal, the appellate court agreed, finding that the series of emails memorialized the parties’ agreement to change the plaintiff’s responsibilities under the employment agreement and that the parties’ typed names at the end of the emails signified their intent to authenticate the contents. As such, the series of emails satisfied the no oral modifications clause in the employment agreement.

The effect of the decision is that an email or series of emails can satisfy the requirement both by statute and by contractual agreement that modifications must be signed and in writing. Including a no oral modification clause in your contract may not be enough to prevent modification by email.

As a result, it may be wise to add a provision that explicitly states that the contract may not be modified orally or by email and that any amendment must include a handwritten (not electronic) signature.

For a more in depth discussion of modification of contracts by email and the Stevens decision, see Stevens v. Publicis: The Rise of “No Email Modification” Clauses?, by Stephanie Holmes, 6 Wash. J.L. Tech. & Arts 67 (2010), which also served as the principal reference for this article.

To establish a claim of equitable estoppel, three elements must be established: (1) conduct which amounts to a false representation or concealment of material facts; (2) intention that such conduct will be acted upon by the other party; and (3) knowledge of the real fact.

The party asserting estoppel must show with respect to himself: (1) lack of knowledge of the true facts; (2) reliance upon the conduct of the party estopped; and (3) a prejudicial change in his position.

The 2007 case of 335 Second Street Housing Corp. v. Fridal Enterprises, Inc. involved a mortgage loan extension agreement that contained a no oral modification clause.

The agreement extended an existing mortgage loan for 5 years at a 7% annual rate of interest that increased to 9% after the first three years. The agreement provided for a further extension for another five years upon 30 days’ notice and payment of a 1% extension fee and with a further increase in interest to 14%. If the loan was not paid at maturity, the interest would go to 16%.

The borrower made interest-only payments at the contract rate as required by the agreement throughout the initial 5-year extension term. The borrower provided no notice of its intent to exercise the additional extension and paid no extension fee. After the expiration of the initial term, the lender continued to send invoices for interest at the 9% rate, and the borrower continued to pay them.

About four months after the expiration of the term, the lender sent a notice to the borrower indicating that the loan had matured and expressing its willingness to discuss an extension and modification of the loan. The letter also instructed the borrower to immediately call the lender to set up a meeting.

The borrower did not contact the lender to set up a meeting. Instead, the lender continued to invoice the borrower at the 9% rate and the borrower continued to pay. This went on for more than nine years.

At that time, the borrower requested a payoff letter in connection with a refinancing of the property to do renovations. The lender responded with a demand for the principal balance plus the 1% extension fee plus delinquent interest calculated at the difference between 9% and the applicable increased contract rates of 14% and 16%.

The lower court found in favor of the borrower and held that the lender was equitably estopped from claiming the delinquent interest and the extension fee. The court relied on the principal that the doctrine of equitable estoppel may be invoked where a lender’s actions have lulled a borrower into a false sense of security or where it would be inequitable to enforce certain terms of an agreement.

In affirming the lower court’s decision, the Appellate Division held:

“[T]he Supreme Court correctly determined that the defendant engaged in a course of conduct over a period in excess of nine years whereby it affirmatively billed the plaintiff at an interest rate lower than that authorized by the parties’ agreement, and acquiesced in the plaintiff’s payments at that rate without complaint, objection, or the declaration of a default. Moreover, the evidence submitted on the motions established that the defendant’s conduct induced the plaintiff’s reasonable belief that the higher rate would not be imposed, and that the plaintiff relied upon that conduct to its detriment in refraining from seeking a more advantageous financing arrangement. Accordingly, the Supreme Court properly granted summary judgment to the plaintiff on the basis of equitable estoppel.”

Under New York law, the elements of promissory estoppel are a clear and unambiguous promise, reasonable and foreseeable reliance by the party to whom the promise is made, and an injury sustained in reliance on that promise.

As in the case of waiver, the New York statute governing no oral modification clauses does not preclude a claim of promissory estoppel against a party seeking the benefit of a no oral modification clause.

So if one party to a written agreement makes an oral promise to the other party that effectively modifies the agreement, and the other party reasonably relies on that promise to his detriment, he may have a valid claim based on estoppel. This is true even if the written agreement contains a no oral modification clause.

However, when a claim of promissory estoppel is being used to overcome the requirement for a written agreement required by statute (such as the New York statute governing no oral modification clauses), the injury suffered by the party claiming estoppel must be extraordinary or, to use the word applied by the courts, “unconscionable.” Some courts have said that the injury or damage must be “beyond that which flows naturally from the non-performance of the unenforceable agreement.”

Even if all of these elements are satisfied, a claim of estoppel still may not succeed in the face of a no oral modification clause. Reliance on the oral promise by the party claiming estoppel must be reasonable. And it may be difficult to prove reasonable reliance on an oral promise in cases where the parties have agreed in advance that oral promises would not be sufficient to modify the contract.

In the 2011 case of Amalgamated Bank v. Fort Tryon Tower SPE LLC, the court found that the defendant’s reliance on the plaintiff’s oral promise was not reasonable because the document in question contained a no oral modification clause.

Therefore, the claim of estoppel, though not precluded by the statute governing no oral modification clauses, was defeated in the face of such a clause because the element of reasonable reliance could not be established.

Next week, we look at the doctrine of equitable estoppel.

The article cites a report from Deutsche Bank analyst Harris Trifon as the latest critique, which describes 12 large commercial real estate loan workouts that Trifon calls “the poster children for questionable behavior.”

The special servicers have defended themselves saying they have cut the best deals possible and denying any conflicts of interest, according to the Journal report.

Of course, it’s easy to play Monday morning quarterback and question whether better terms could have been negotiated without any insight into the circumstances and little or no knowledge of how the negotiations unfolded. As in any negotiation, there is give and take, and the final deal may not be ideal from either side. This is the nature of compromise.

However, to an outsider looking in, having no knowledge of the content of the negotiations, it may not be surprising that investors and analysts have reacted how they have.

And therein lies the problem. In many cases, the investors do not have access to all the relevant information. The solution: more transparency.

“We have got to dispel all the myths about workouts,” Toby Cobb, co-chief executive at LNR Property told the Journal.

The article goes on to describe how special servicing companies have been working with investors to create new disclosure guidelines, which they hope to complete by the end of the summer.

Indeed, the analysts in particular could benefit from more information. Included on Trifon’s list was the modification of a $209 million loan for a pair of Westin hotels that extended the mortgage by 15 years and cut the interest rate to zero.

As discussed here, that modification was required by an order of the bankruptcy court.