Indiana Commercial Foreclosure Law

Comments Now Welcomed

I've decided after over 1 1/2 years of publishing this blog to try the "Comments" option TypePad offers.  Starting with the recent Premier Properties/Chris White post, readers can click on the "Comments" link at the bottom and provide feedback, etc. on the subject at hand.  I'm hopeful this will be interesting for secured lenders and counsel who regularly read my blog or others who stumble upon it through an internet search.  I'll test this for a period of time and see how it goes.  As always, I welcome your emails, and now look forward to reader's comments....   

Media Reports: It's "Game Over" For Premier Properties - Is Chris White Next?

As my regular readers are aware, I've been following the fascinating story of the fall of Indianapolis-based real estate developer Premier Properties USA since the Indianapolis Business Journal first started covering it earlier this year.  Today - May 30 - as noted below is a significant day.  I will continue to update this post, and I ask you to email me links to other media reports, which I'll post here.  A friend and business associate of mine mentioned yesterday that someone should write a book about the rise and fall of Chris White's real estate empire.  I wish I had the time ... perhaps a local journalist will do it some day.

March 10:    Click here for an article about the continued financial struggles of local real estate developer Premier Properties and its owner, Chris White.  Embedded in the article are links to two prior stories regarding the matter.

Bridgewater Falls put in receivership - story from March 11.

April 7 update from IBJ:  click here .  Mr. White is keeping many lender workout departments and creditor's rights lawyers busy (including me, by the way). 

April 9's breaking news:  click here for latest IBJ story.

April 10 story from The Indianapolis Star:  click here.

April 12 article on front page of Star:  Lawsuits show free-spending CEO in grip of soaring debt.

April 17, post-auction to mezz lender Dominion reports:  IBJ and Star.

April 24, post-bankruptcy (Chapter 11) filing by Premier Properties:  IBJ and Star.  It does not appear Mr. White, personally, has filed for bankruptcy protection to this point.  Click - .pdf - for a copy of the April 23 bankruptcy petition in Case No. 08-04607-BHL-11.

April 25, IBJ: Emergency hearing scheduled in bankruptcy court.

April 26, IBJ:  Criminal charges possible in Premier blowup - Bankruptcy puts slew of creditors' lawsuits on hold. 

May 7, Star:  Judge orders "exam" of Premier books

May 12, IBJ:  Trustee to intervene in Premier bankruptcy

May 15, Star:  Colts want Premier Properties decision on stadium suite - looks like there will be another suite available for the new Lucas Oil Stadium....

May 19, IBJ:  DeBartolo to buy Premier Properties' Metropolis from Dominion Capital 

May 28, Star:  Metropolis may have a buyer.

May 29:  Star columnist John Ketzenberger's two cents:  Defaulted debt by Premier goes on and on.

May 30:  The fat lady is singing:  (1) Star:  Premier Properties throws in the towel - (2) IBJ:  Premier Properties to be liquidated. 

I've heard rumors that a personal filing by Chris White is on the horizon - a Chapter 7 liquidation.  My contact's opinion is that we'll see a bankruptcy petition in two weeks.  I'll keep you posted on any such developments. 

June 2, IBJ:  Boberschmidt appointed Premier trustee.

June 11, IBJ:  Trustee working to determine Premier assets.

June 16, IBJ:  Chris White charged with three felonies.  Star:  Developer charged with check fraud, $100,00 theft.

June 18, Star:  Arrest warrant issued on June 17.

June 23, IBJ:  Authorities can't find Premier's White.  Star:  Premier Properties founder hasn't reported to jail yet .

June 26, IBJ:  White taken into custody, posts bond.  Star:  Mall developer booked on fraud charges. 

As my regular readers are aware, I've been following the fascinating story of the fall of Indianapolis-based real estate developer Premier Properties USA since the Indianapolis Business Journal first started covering it earlier this year.  Today - May 30 - as noted below is a significant day.  I will continue to update this post, and I ask you to email me links to other media reports, which I'll post here.  A friend and business associate of mine mentioned yesterday that someone should write a book about the rise and fall of Chris White's real estate empire.  I wish I had the time ... perhaps a local journalist will do it some day.

March 10:    Click here for an article about the continued financial struggles of local real estate developer Premier Properties and its owner, Chris White.  Embedded in the article are links to two prior stories regarding the matter.

Bridgewater Falls put in receivership - story from March 11.

April 7 update from IBJ:  click here .  Mr. White is keeping many lender workout departments and creditor's rights lawyers busy (including me, by the way). 

April 9's breaking news:  click here for latest IBJ story.

April 10 story from The Indianapolis Star:  click here.

April 12 article on front page of Star:  Lawsuits show free-spending CEO in grip of soaring debt.

April 17, post-auction to mezz lender Dominion reports:  IBJ and Star.

April 24, post-bankruptcy (Chapter 11) filing by Premier Properties:  IBJ and Star.  It does not appear Mr. White, personally, has filed for bankruptcy protection to this point.  Click - .pdf - for a copy of the April 23 bankruptcy petition in Case No. 08-04607-BHL-11.

April 25, IBJ: Emergency hearing scheduled in bankruptcy court.

April 26, IBJ:  Criminal charges possible in Premier blowup - Bankruptcy puts slew of creditors' lawsuits on hold. 

May 7, Star:  Judge orders "exam" of Premier books

May 12, IBJ:  Trustee to intervene in Premier bankruptcy

May 15, Star:  Colts want Premier Properties decision on stadium suite - looks like there will be another suite available for the new Lucas Oil Stadium....

May 19, IBJ:  DeBartolo to buy Premier Properties' Metropolis from Dominion Capital 

May 28, Star:  Metropolis may have a buyer.

May 29:  Star columnist John Ketzenberger's two cents:  Defaulted debt by Premier goes on and on.

May 30:  The fat lady is singing:  (1) Star:  Premier Properties throws in the towel - (2) IBJ:  Premier Properties to be liquidated. 

I've heard rumors that a personal filing by Chris White is on the horizon - a Chapter 7 liquidation.  My contact's opinion is that we'll see a bankruptcy petition in two weeks.  I'll keep you posted on any such developments. 

June 2, IBJ:  Boberschmidt appointed Premier trustee.

June 11, IBJ:  Trustee working to determine Premier assets.

June 16, IBJ:  Chris White charged with three felonies.  Star:  Developer charged with check fraud, $100,00 theft.

June 18, Star:  Arrest warrant issued on June 17.

June 23, IBJ:  Authorities can't find Premier's White.  Star:  Premier Properties founder hasn't reported to jail yet .

June 26, IBJ:  White taken into custody, posts bond.  Star:  Mall developer booked on fraud charges. 

Nat City Calls Loan On Frank E. Irish Co.

From today's Indianapolis Star:  Prices were pinching Frank E. Irish Co. when loan was called.

From yesterday's IBJ.com:  Stadium contractor ends operations.

As to the credit issue, here's a telling quote: 

Irish Chief Executive Officer Patrick Dooley said the company was working to extend its line of credit with National City when the bank changed some calculations associated with the loan that eliminated the types of inventory that could be used for collateral.

It would be interesting to hear Nat City's side of the story and to learn more about the collateral calculations.  Evidently, Nat City's reps wouldn't comment.

May 22 Ketzenberger column:  Star columnist John Ketzenberger provides further insight into the Irish default and blames, in part, the subprime lending crisis:  "[Mr. Irish] won't be the last business owner to cry as the subprime lending debacle reverberates through the economy."  Click, Bank's woes put end to Irish's luck.  I'm not sure how much the lender is to blame, but it's a sad story nonetheless.

May 25 Star editor Dennis Ryerson, on the Ketzenberger column:  More to story behind the Irish Co. story.  Ryerson quotes a Nat City rep, who appears to question Ketzenberger's theory that the subprime lending crisis caused the bank to call Irish's loan. 

_______________

In other news, today's Cincinnati Enquirer is reporting that one of the city's downtown hotels - The Hyatt Regency Cincinnati - is headed for a receivership:  Lender seeking foreclosure on downtown hotel.  Midland Loan Services is the plaintiff in the suit. 

S&P: Defaults In U.S. To Accelerate Through 2008

Click here for a news piece from monitordaily.com.  "The pace of corporate defaults in the first quarter of 2008 equaled the total for all of 2007, according to a new report from Standard & Poor's...."

Allison Transmission Owner Receives Default Notices

Click for stories released today:  inside indiana and IBJ.

Click for March 10 AP story concerning Carlyle Capital's response.

March 13 press release from Allison owner:  click here. 

Time.com On The Potential Impact Of The Mortgage Crisis

As always, I keep my eyes peeled for significant news stories that touch upon secured lending, and in particular issues relating to defaults on commercial loans.  Here are a couple links to recent articles from Time:   

How Bad Will the Mortgage Crisis Get?

Is a Collapse in the Cards?

Signs Of The Times

I'm providing links to a couple news stories from today that reflect the current economic/commercial loan default climate and the continued problems arising out of the subprime lending crisis:

"Subprime Lawsuits Already Outpacing S&L Litigation" and "Sharper Image files for Chapter 11 Bankruptcy".

My follow-up post on the Bank of America case and the mortgage termination issue is coming soon.

For My Indiana Lawyer Readers...

If you or your colleagues are interested, click here for a link to an electronic version of the brochure for a continuing legal education seminar at which I'm scheduled to present on March 18, 2008 in Indianapolis.  They've entitled the conference "Real Property Foreclosure:  A Step-by-Step Workshop."

Off Topic: Residential Lenders Continue To Take a Beating

As my regular readers are aware, this blog is not dedicated to residential mortgage or consumer lending matters, in part because those issues are not the focus of my practice.  However, my Firm represents lenders in all sorts of legal disputes, and the sub-prime mortgage crisis may have far-reaching consequences that could ultimately affect commercial lenders.  Plus, the political climate surrounding the problem is compelling, so I can't resist periodically posting news stories about the subject. 

Here are links to two national articles from today that address the City of Cleveland's "public nuisance" lawsuit against several banks:  CNN and MSNBC.  The case represents an interesting combination of politics and law.  I have not read the court filings, and at this time know nothing about the case other than what these two stories say.  I will be curious to see whether the case can survive a pre-trial motion to dismiss.  I would agree with one of the quotes:  this indeed is a "one-of-a-kind" case.  From purely a legal perspective, I have difficulty believing the case has much merit.  But, I've been wrong before....   

Media Reports On Health Of Central Indiana Commercial Real Estate Market

Pieces from today's Indianapolis Star and Indianapolis Business Journal discuss the status and future of Central Indiana's commercial real estate market, including the impact of the lending crisis.  Click for the stories:  IndyStar1, IndyStar2 and IBJ.  Once again, the theme seems to be that, while development may be down, there are few if any signs of substantial increases in commercial loan defaults, foreclosures or bankruptcies in deals tied to commercial real estate.  Relative to the rest of the country, Indiana appears to be in decent shape in the commercial real estate and commercial lending sectors.  Please e-mail me if you feel otherwise or are aware of contrary media reports, thanks.   

Indiana Legislation, 2008

According to my sources, it appears the only state legislation in the hopper that may affect commercial foreclosures is Senate Bill No. 62.  Here's the bill:  (SenateBill62.pdf).  Here's the fiscal impact statement:  (FiscalImpactStatement.pdf).  The proposed change - a minor one to say the least - "eliminates the requirement that a sheriff post notice of a foreclosure sale in at least three public places in each township where the real estate is located."  The bill really affects civil sheriff's offices, not lenders or borrowers. 

As an aside, it's my understanding that some other states are exploring the enactment of more dramatic changes to foreclosures, including ways to expedite the sometimes lengthy process.  I was studying Florida law for a case last month and learned that, unlike Indiana, counterclaims filed against the foreclosing lender will be severed (bifurcated/split) from the original foreclosure claim filed against the borrower.  In Indiana, counterclaims filed by the mortgagor, even claims without merit, can result in substantial delays of the process.  I'm involved in a contested residential foreclosure case right now that has been around for almost three years, primarily due to the tactics of borrower's counsel and also court-related delays.  We finally tried the case in September and successfully obtained a judgment and decree of foreclosure.  Alas, the defendant borrower is pursuing an appeal....   

From The New York Times: "Foreclosures Hit A Snag For Lenders"

If you deal with mortgage security pools, and in particular the foreclosure of mortgages within such a pool, you should read today's interesting article from The New York Times:  "Foreclosures Hit a Snag For Lenders".  The article addresses federal court foreclosure litigation in Ohio and specifically an opinion by Judge Boyko dismissing fourteen cases because the plaintiff (foreclosing entity) failed to prove it had standing to pursue the cases.  I located the Judge's October 1 order referenced in the article: .pdf.  My colleague Chris Jacobson helped find the October 31 opinion: BoykoOpinion.pdf.

The moral of the story is that the institution filing the foreclosure suit, if pressed by the Court or the defendant borrower, must have proof that it owned the note and held the mortgage on the date of the filing of the foreclosure complaint.  As demonstrated by the Ohio ruling, with respect to mortgage security pools this seemingly simple requirement may be burdensome or perhaps even impossible under certain structuring. 

Corrective action probably can be taken during the proceedings in most cases to ensure that the named plaintiff actually holds the mortgage and owns the note.  For example, depending upon the circumstances, the pleadings can be amended to name the proper party or, on the other hand, assignments can be executed to place the note/mortgage into the hands of the plaintiff.  Lenders/investors and their counsel should be advised of the Ohio ruling and prepare themselves accordingly.  I will post updates to this story as the situation warrants.   

Residential/Subprime Mortgage Crisis Does Not Appear To Be Materially Affecting Commercial Loans - At Least Not Yet

From time to time over the past several months, people have asked me how the sub-prime mortgage crisis and the record number of residential mortgage foreclosures have affected my practice and the industry that I target - commercial, secured lending.  For some context, here's an article from today from MSNBC - "Want A Second Mortgage?  Good Luck!".

People outside of the industry are surprised to learn that commercial loans continue to be in pretty good shape.  The clients and prospects I've spoken to over the past year have conveyed that their default rates remain very low.  As I understand it, there's really no comparison between the rates of residential/consumer mortgage defaults and those of commercial/secured loan defaults.  Although I gather that commercial credit may me tightening, the sub-prime mortgage crisis simply hasn't translated to a commercial loan problem, at least not to this point.  Here's a story today from the Cincinnati Enquirer entitled "Commercial Building Booms" that supports what I've been hearing. 

This is not to say that an increase in commerical defaults, workouts, foreclosures or bankruptcies may not be on the horizon.  I'm no economist, but there certainly are signs for the potential of an up tick in such matters.  Here are links to a couple stories from today's New York Times that speak to these issues:  Fed Chief Warns of Worse Times in the Economy and Wachovia Sets $1.1 Billion in October Losses.  If your impressions are different than mine, I would appreciate learning more about what you're experiencing and invite you to call or email me.         

Memo To Self: Happy Anniversary

On November 1, 2006, I launched this blog.  One year, 68 posts and thousands of hits later, my site is going strong, and its visitors are steadily growing each week.  If you're new to Indiana Commercial Foreclosure Law, welcome.  If you've been here before, thank you and welcome back. 

First post.  I thought it might be useful to re-publish my very first post: 

I designed this blog to provide a resource for individuals in the banking and commercial lending industry who deal with Indiana-related commercial foreclosure issues.  Today, November 1, 2006, my blog debuts with the goal of publishing posts at least weekly in one of four categories:  Court Commentary, Notable News, Practical Pointers and Statutes Say.

Court Commentary will have content analyzing recent Indiana state and federal court opinions on the substantive law and procedural rules that govern this field.

Notable News will provide Indiana-related news, from various media outlets, impacting commercial lenders generally and the work-out/foreclosure side of their businesses specifically.

Practical Pointers will include articles designed to assist secured lender representatives who are, or are about to be, involved in a commercial foreclosure lawsuit. 

Statutes Say will publish posts about Indiana statutory law applicable to commercial foreclosures and secured collections.

I’m excited about developing a resource for commercial lending institutions faced with under-performing or non-performing loans.

  Because this is a new blog, I hope to receive feedback on how I can make it more useful.  I welcome suggestions, which you can e-mail to me by clicking on the “E-Mail Me” link.  My contact information in its entirety can be found by clicking on the “About” link. 

Features.  In addition to the fresh content offered at least weekly, over the course of the past year I've enhanced some of the permanent features of this blog that appear along the left side of the home page.  These include: 

• The "About" link, which takes you to my bio
• The self-explanatory "Email Me" link
• Links to the four categories described that allow you to review all posts on that subject
• The ability to conduct a Google search of this blog - to research all issues I've addressed
• A link to subscribe to this site's RSS feed - a great way to have new posts automatically delivered
• The opportunity to sign up to receive emails of new posts - this is secure and will never result in contact from me
• Links to the relevant Indiana statutes
• Links to the pertinent Indiana procedural rules
• Links to the major Indiana state and federal court websites
• Links to local media websites
• Links to the predominate trade/professional organizations for secured lenders
• Links to posts, archived by month

Finally, each post can be emailed by clicking on "Email this" at the end of each post.

I would like to thank my collegue Matthew Adolay for reviewing my articles before I formally post them.  Having his pair of eyes has been a great help and has ensured that my work is readable and understandable.  Thank you, Matt.

Again, this blog is dedicated to commercial lenders and banks needing to foreclose on loan collateral, enforce liens and collect commercial, secured debts.  If you work in this area or routinely deal with these issues, please stop by from time to time.  And, always remain mindful that my objective is to be a resource for you, so email or call if you think I can improve this blog in any way.  Thanks.

AP: Indiana Bank Sues Vick Over Business Loan

It's raining and pouring on Michael Vick.  I never imagined blogging about his demise, but this news report from today actually is relevant to the commercial foreclosure area, not to mention interesting on a number of levels.  It would appear Vick received a $2.0 million loan secured by 130 vehicles.  To the extent there are any follow-up stories on this matter, I'll update this post. 

10-1-07 Update:  Here's a .pdf of the Complaint filed in the South Bend division of the USDC for the Northern District of Indiana - .pdf.  Vick is alleged to be a guarantor of borrower Divine Seven, LLC's loan.  Vick also is alleged to be a member of the LLC.  If you're wondering how Vick, apparently a resident of Virginia, can be sued in South Bend, look for my post this week about Indiana jurisdiction over out-of-state guarantors.

AP: Beazer Homes Receives Notice of Default on Senior Notes

Admittedly, I haven't worked on a $1.38 billion commercial foreclosure case.  (I suspect not many Indiana lawyers have.)  Click here for the AP story.  I hope someday to be involved in some capacity with a case so large and complex.  One of the interesting things about the Beazer matter is that, apparently, the default may not relate to non-payment, which triggers foreclosure in the vast majority of cases.  The Beazer story illustrates that there can be a multitude of circumstances that give lenders the right to accelerate and foreclose on loan collateral.   

TIME: The Boom In Foreclosure Investing

This article from Time magazine's website is slightly off topic for my blog, but interesting nonetheless.  The procedures and principles outlined in the story apply with equal vigor to commercial properties, and I know there are investors who use similar business models to flip commercial real estate.  Of course, the commercial property inventory is no where near as high as the residential properties routinely set for sheriff's sales.

The Indianapolis Star ran a similar story on Sunday the 9th:  click here for the Indiana-related article "Fruits of Foreclosure."

Report: Business Bankruptcy Rates Continue to Rise in 2007

United States business bankruptcies continue to rise in 2007.  Second quarter filings show another dramatic increase in the number of businesses seeking protection from creditors.  Click here for the full story.

Reuters: Lending Woes Hit Commercial Real Estate Market

This article from today comes out of New York. 

Frozen Pay Drives Out Bankruptcy Judges

An article from BusinessWeek.com dated July 20 may be of some interest to secured lenders that periodically find themselves in bankruptcy court protecting their interests in collateral or advocating for other loan rights.  Click here for the story.

COULD INDIANA'S PROPERTY TAX CRISIS LEAD TO COMMERCIAL FORECLOSURES?

If you don't live in Indiana, you may not be aware of the major, continuously-developing story about the recent changes to Indiana's property tax scheme, which changes have resulted in substantial increases for some residential real estate owners.  For background, click on the The Indianapolis Star, which has covered the issue for a couple weeks.  Today, in an effort to provide some relief, Indiana's governor Mitch Daniels ordered a new assessment in Marion County (Indianapolis), in part to deal with commercial properties that were ignored in the recent reassessment.  Here's that story.

So far, residential property owners have been hit the hardest, but significant tax increases for Indiana commercial property owners appear to be on the horizon, barring a fundamental change in the system.  This begs the question of whether we may see an upsurge in under-performing or non-performing commercial mortgage loans.  An article from the Indianapolis Business Journal suggests this possibility.  In a piece about multifamily properties - Apartment Owners Hammered by Tax Hikes - a local apartment broker thinks that, in some cases, complex owners "will default on their mortgage," in addition to deferring maintenance or improvements.  It stands to reason, for instance, that a 70 percent increase in real estate taxes could trigger some businesses to default on their mortgages.  I will continue to keep an eye on this issue and how commercial lenders may or may not be impacted.  I suspect that, ultimately, we'll see a political solution to the dramatic tax increases before we'll see a significant rise in commercial foreclosures, however.      

USA TODAY STORY DISCUSSES AN ASSET PROTECTION SCHEME

A USA Today article from today, "Legal Gaps Help Hide Assets From Creditors, IRS," discusses schemes, and even a business assisting with schemes, to hide assets from creditors.  Here's a link, which has embedded links to prior, related stories.  Among other things, the article reminds us of how difficult and expensive it can be to collect unsecured debt -- perhaps a good lesson for secured lenders as to how important it is to evaluate collateral before making a loan.  Banking on the hope of recovering a deficiency judgment can be a risky proposition.

SLIGHTLY OFF TOPIC: Dispelling A Residential Foreclosure Myth

The Indianapolis Star published a letter to the editor yesterday with the headline:  "Lenders don't want you to lose your house."  Here's a link.  My partner Tom Dinwiddie co-wrote the letter on behalf of the Indiana Mortgage Bankers Association.  Some of the points he makes apply with equal vigor to commercial foreclosures, although as I understand it the pro-consumer legislation currently being considered in Indiana would not impact business borrowers. 

IBJ: Experts Claiming That Banks Are Losing Patience With Marginal Borrowers

The Indianapolis Business Journal's on-line edition has an interesting article today asserting that a bank's tendency to negotiate traditional workouts is changing.  The piece quotes Indianapolis experts in the area, including Dave Hamernik, who I've seen speak and whose firm is located in my firm's office building.  A CPA and turnaround specialist, Mr. Hamernik knows his stuff.  (Click here for his firm's website.)  If what Mr. Hamernik and Mr. Beck say is true, this trend doesn't bode well for underperforming business borrowers. 

COLT COLLATERAL

When it comes to asset based lending, the types of loan collateral, particularly the tangible assets that may become subject to a security interest, can be quite interesting.  For example, today's Louisville Courier-Journal has an article about a lien dispute between Fifth Third Bank and the owner of a Kentucky Derby contender.  Allegedly, several thoroughbred interests, including the race horse Great Hunter, were a part of the collateral for about $3 million in loans that went into default.  The case, which was pending in California, has settled.  One wonders what would have happened to Great Hunter had Fifth Third become the owner of the horse.  Depending upon the timing, it's certainly conceivable if not likely that the thoroughbred would have missed the May 5th race.

IRWIN UNION OWED $2.8 MILLION IN CONCRETE CASE

The Star's John Ketzenberger has a column today about how Irwin Union Bank, 107 other creditors and the government may or may not be able to collect from Carmel Concrete, one of the five local concrete companies targeted in a price-fixing case last year.  The litigation now is in bankruptcy court, and the goal appears to be much like any other commercial foreclosure case - sell the loan collateral (and other assets) in order to pay the lenders (and other creditors).

TODAY'S INDY STAR ALL OVER RESIDENTIAL MORTGAGE FRAUD

The mortgage fraud/subprime lender story is off topic for this blog because the problems do not directly involve or affect most commercial lenders.  But the issues are important and likely are of some general interest to the commercial lending industry.  The Indianapolis Star's Sunday Edition has five articles dealing with the issues - probably due in part to the fact that the Indy metro area ranks number three in the nation in foreclosures.  Here are the pieces: (1) case study, (2) more about the prosecution, (3) possible state legislation, (4) potential Congressional action and (5) civil sheriffs affected.  Our firm has handled some of the civil litigation (fraud recovery) that has arisen out of these types of cases.  One of the many challenges with such matters is being able to collect from the responsible persons or entities, many of whom are judgment proof. 

PAYTON WELLS UPDATE: STATUS QUO

Here's a brief update to my January 28/February 1 post on the demise of the Payton Wells auto dealerships, which appear to be in foreclosure.  Anderson's Herald Bulletin reports today that the city's Wells dealership and service department remain frozen in time since January 25, when borrower Wells locked its doors in response to lender Regions Bank's foreclosure suit.  Somewhat amazingly, customers' cars are still in service bays on the property.  It's been over thirty days.  I have no first-hand knowledge of the case and have not read any court filings (they're not on line).  Still, I'm a little surprised by the inaction, although my colleague Chris Jacobson, who has been involved in auto dealership foreclosures, tells me this kind of lock down is not unusual.  The appointment of a receiver, under Indiana Code 32-30-5, to run all or a part of the business usually is not a viable option in dealership cases.  I'll be on the lookout for media updates.

3-2-07 Update:  The Indianapolis Business Journal, in two small pieces, is reporting that customers have taken their complaints up with the Indiana AG's office:  1 and 2.  Still, nobody from Wells or Regions is talking.

PAYTON WELLS AUTO DEALERSHIPS ARE THE SUBJECT OF A COMMERCIAL FORECLOSURE ACTION

Reports Friday from The Indianapolis Business Journal and Saturday from The Indianapolis Star state that Regions Bank has sued prominent African-American auto dealer Payton Wells in connection with his default on a $3.1 million loan, which evidently is secured by real estate in Marion County and auto dealership property in Indianapolis and Anderson.  National City Bank, another secured lender, also is involved in the case.  In response to the suit, the auto dealerships were closed, although quotes from the dealerships' general manager suggest the closings are temporary.  It will be interesting to see if Wells and his lenders can achieve a workout, or whether the businesses are headed toward bankruptcy or perhaps foreclosure.  I'll continue to follow the story as it's reported in the local media. 

2-1-07 Update:  Here's some additional insight from Star business columnist John Ketzenberger.  As of today at least, the future of the dealerships does not look promising.  But it would not surprise me if Wells and his lenders reach a compromise and refinance the loan (or loans) in order to salvage the dealerships for the foreseeable future.  Quotes in today's column suggest otherwise, however.

HILBERT SHERIFF'S SALE OFF

In my "Notable News" category, you'll find posts from November 17, December 1 and December 6 that follow the Conseco v. Steve Hilbert $84 million judgment enforcement proceedings.  My 11-17-06 post "Not Your Typical Sheriff's Sale" mentioned that Hilbert's $20 million mansion had been slotted for a sale by the Hamilton County Civil Sheriff next Thursday, December 28.  Today, The Indianapolis Star reports that Conseco canceled the sale pursuant to the settlement reached December 6th.  Evidently, in lieu of the judicial sale, Hilbert simply deeded the property to Conseco.  Conseco, in turn, was able to avoid the time and expense of a sheriff's sale and now can move forward with disposing of the property itself, likely with a better financial result.

ATTEMPTED "SHORT SALE" OF SHERMAN PARK, AN INDUSTRIAL COMPLEX, FAILS

An unidentified lender has sued to foreclose on a 1.2 million square foot industrial complex on the east side of Indy.  Here's a link to the IBJ story.  A local industrial park property manager, Larry Harshman, has been named receiver.  Interestingly, he's quoted as not having been contacted before being appointed.  It's been my experience that lenders essentially will line up a receiver in advance, get the borrower's blessing and then ask the court to appoint the lender's specific choice.  The statute doesn't require this, however. 

Also of note is that the lender and borrower tried to avoid formal foreclosure proceedings by putting the property up for auction, which evidently failed to generate a sizable enough offer to satisfy the lender, the borrower, or both.  This attempted pre-foreclosure transaction sometimes is labeled a "short sale" and is designed, in part, to save time and expense.  Needless to say, a short sale avoids a judicial (sheriff's) sale of the collateral.   

CONSECO V. HILBERT SETTLED

Several local media sources are reporting that Carmel, Indiana-based Conseco and its founder and former CEO Steve Hilbert reached a confidential settlement early this morning.  Indianapolis Star story link.  This appears to resolve the proceedings supplemental phase of the litigation about which I wrote in my December 1 post "Not Your Typical Order To Appear."  I doubt that this will impact the December 28 sheriff's sale of Hilbert's former mansion, however.  (See my November 17 post "Not Your Typical Sheriff's Sale").  I suspect Hilbert essentially has surrendered that asset to Conseco as part of the collection efforts.   

Naturally, judgment debtors don't enjoy being grilled in Court about the nature and extent of their assets.  Hilbert avoided such uncomfortable and public questioning by settling this morning just before he and his wife were set to appear.  Because the settlement is confidential, we'll never know who got the better deal.  Did Hilbert string along Conseco and wait to settle until virtually the last possible minute?  Or, did Conseco push Hilbert to the brink of an awkward hearing to squeeze more money out of him?  My guess is, it was a combination of the two.  Regardless, this is an example of how Court intervention, or more specifically the threat of it, ultimately causes parties to settle.

Here is The Indianapolis Star's full story in Thursday's paper:  'It's all over now'  

POTENTIAL IMPLICATIONS OF INCREASE IN COMMERCIAL REAL ESTATE LOANS

In the November issue of Hoosier Banker, author Jean Wojtowicz provides nice insight into the utilization of alternative loan products in her article "Yellow Flags on Commercial Real Estate."  (hoosier_banker_article.pdf).  Of particular significance to this blog is Ms. Wojtowicz's mention of Susan Schmidt Bies' recent testimony before a Congressional Subcommittee.  Ms. Bies, of the Federal Reserve, stated that between 1992 and 2005 commercial real estate concentrations of the nation's largest banks almost doubled.  According to Bies, commercial real estate is a volatile sector of the economy, and a downturn could trigger financial stress like that seen in the late '80's/early '90's (which, in turn, would trigger more commercial foreclosure cases).

NOT YOUR TYPICAL ORDER TO APPEAR

By way of follow-up to my November 17 post "Not Your Typical Sheriff's Sale," J.K. Wall of The Indianapolis Star is reporting that former Conseco CEO Steve Hilbert will be in Hamilton Circuit Court (Noblesville, IN) this morning in connection with Conseco's continued efforts to enforce its $84 million judgment against Hilbert.  (Link to story.)  Although I have not reviewed the pleadings, presumably Hilbert's appearance before Judge Proffitt is pursuant to an Indiana Trial Rule 69(E)(3) order to appear.  As some of you may know, this phase of Conseco's litigation against Hilbert is called "proceedings supplemental to execution."

Here's a link to The Star's update to the story:  Hilbert, Conseco agree on $1.1M account.

Here's a link to the full story from Saturday's Star:  Hilberts, Conseco back at it.

NOT YOUR TYPICAL SHERIFF'S SALE

The Indianapolis Star is reporting that, on December 28, the Hamilton County (Indiana) Sheriff will sell former Conseco chief Steve Hilbert's $20 million mansion as part of Conseco's efforts to satisfy its $84 million judgment against its former CEO.

WAVE OF CORPORATE BANKRUPTCIES EXPECTED

The Indianapolis Star has an AP story this morning that states corporate bankruptcy filings "should hit courts in a wave within six to 18 months...."  The report comes from an analysis by the American Bankruptcy Institute and Dow Jones' Daily Bankruptcy Review.  Loan default rates are expected to move up, due in part to the effect of higher interest rates.  The industries seen as most at risk are real estate and construction.

SLIGHTLY OFF TOPIC - FORECLOSURE RATES

The Indianapolis Star is reporting this afternoon that Indianapolis-area foreclosure rates declined slightly.  Here's a link to the report:  Star.  Indiana recently has been a leader in the country with respect to residential foreclosures....

WELCOME TO MY BLOG: INDIANA COMMERCIAL FORECLOSURE LAW

I designed this blog to provide a resource for individuals in the banking and commercial lending industry who deal with Indiana-related commercial foreclosure issues.  Today, November 1, 2006, my blog debuts with the goal of publishing posts at least weekly in one of four categories:  Court Commentary, Notable News, Practical Pointers and Statutes Say.

Court Commentary will have content analyzing recent Indiana state and federal court opinions on the substantive law and procedural rules that govern this field.

Notable News will provide Indiana-related news, from various media outlets, impacting commercial lenders generally and the work-out/foreclosure side of their businesses specifically.

Practical Pointers will include articles designed to assist secured lender representatives who are, or are about to be, involved in a commercial foreclosure lawsuit. 

Statutes Say will publish posts about Indiana statutory law applicable to commercial foreclosures and secured collections.

I’m excited about developing a resource for commercial lending institutions faced with under-performing or non-performing loans.

  Because this is a new blog, I hope to receive feedback on how I can make it more useful.  I welcome suggestions, which you can e-mail to me by clicking on the “E-Mail Me” link.  My contact information in its entirety can be found by clicking on the “About” link.