How do bankruptcy proceedings and receivership differ?
As far as how the law works, bankruptcy is fairly complex and very structured. Receivership is very generic. The law in federal court and most state courts is that a judge who appoints a receiver can give the receiver power to do whatever he thinks is necessary. The judge has wide latitude. How severe is the level of distress in the hospitality sector? A common scenario today is for a hotel to be worth half the amount of the mortgage. A borrower with a non-recourse loan, or a big hotel company with a strong relationship with its lender, is going to hand it back and say, “Look, this makes no sense for us. We will never have any equity in this deal. We’ll never see a dollar from operations for the next 10 years, at best.” If there are not a couple thousand hotels in that scenario right now, I’d be shocked. There are probably at least 500 hotels in California alone in default. How busy is your shop these days? The calls that we get on non-performing commercial loans are continuing to incr
