The Prague Post
December 1st, 2008
Endowment Fund     Business Listings ONLINE      Reservations      Classifieds    Subscriptions
Prague Center Hotel
Prague Real Estate

Home » Archives » Real Estate

Legal affairs

Firm holds conferences to help real estate community make sense of the law

August 20th, 2008 issue

By Chris McMorrow

JAN PŘEROVSKÝ/THE PRAGUE POST
Evan Lazar and Juraj Alexander from Salans' Prague offices dish legal advice to Czech-based lenders.
Salans


Platnéřská 4
Prague 1
Tel.: 236 082 111
E-mail: prague@salans.com
Web: www.salans.com

FOR THE POST
Most people here and abroad are aware of the scores of homeowners facing foreclosure in the United States. Although this situation has not had a major effect on the Czech economy and the continued growth in value of the crown, lending institutions are justifiably wary of the same thing happening here.
These uncertain times compelled international commercial law firm Salans to create a department dedicated solely to clients who are struggling to stay out of the courts due to delinquent property payments. Along these lines, the firm recently held the first of what will be an ongoing series of conferences on important legal issues surrounding the real estate scene in Central and Eastern Europe.
Produced in cooperation with the Association for Development of the Real Estate Market, the subject of Salans’ first all-day conference was “Financially distressed real estate projects: What lenders need to ask a lawyer.”
Salan lawyers as well as invited professionals from outside the country focused on discussing debt settlement that would keep lenders and borrowers out of the court system, and why this is mutually beneficial.
The session began with a presentation by Petr Merežko, deputy director of real estate deals at Česká spořitelna, regarding the risks for bankers, and the different types of default situations that can occur. Evan Lazar, a partner and co-chairman of Salans Global Estate Group, followed with an explanation of how to resolve troubled real estate loans, using out-of-court negotiation tactics.
“This is what we call a loan workout. A lot of times, what happens in a workout is a process, a methodology is agreed upon between the lender and the borrower,” Lazar says. “We would meet with the client and find a way to turn a nonprofitable real estate investment into a profitable one — by restructuring or repositioning it in the market.”
Fortunately, no Salans clients have experienced these types of problems yet, but, if and when they do, Lazar says Salans is ready.
If something were to happen, “I would suggest a meeting with the lender, and I would explain why it’s in the interest of the lender to participate. It can be a win-win situation,” Lazar says. “Both the lender and the borrower and the lawyer know far better how to resolve the situation positively than a judge.”
He stresses the need for lenders to act quickly at the first sign of financial problems in a project they have financed, and things that banks can do to obtain borrower cooperation, including personal guarantees.
The ever-present possibility of a housing slump popping up here has had at least one positive impact: A new bankruptcy law aimed at keeping financially troubled companies afloat was passed last year.  
“The old law was corrupt, it wasn’t working and basically had nothing to do with other bankruptcy laws in other parts of the world,” says Juraj Alexander, an associate in Salans’ Prague offices.
“In the old days, failed businesses would be liquidated and sold off in pieces,” Alexander points out. “Thanks to the new legislation, the point now is to keep the business going so no jobs are lost and so the investment is not lost.”
Lazar, however, warns that local lending institutions are growing more cautious.
“Generally, banks are being more conservative in their lending practices,” he says. “They’re rejecting more applications for all loans they did even six months ago. They’re applying a harder standard to people who want to borrow money for buying a residence, funding a building project or a starting a small business.”
With 750 lawyers operating from 18 offices all over the world and 200 of these lawyers focusing on the cross-border real estate industry alone, Salans is more than qualified to advise clients who find themselves in dire financial circumstances, Lazar assures.
Salans’ first conference was well attended by bank representatives of prominent lenders. The firm received a lot of positive feedback that it will review while putting together another conference this fall, according to Lazar.  
Chris McMorrow can be reached at realestate@praguepost.com


Other articles in Real Estate (20/08/2008):

Browse the Current Issue

If you enjoyed this article, why don't you subscribe to the print version!
We accept secure online transactions provided by PayPal and Moneybookers

Be the first to add a comment!


Full Name: *
City: *
E-mail: **
This comment can be published in the print version of The Prague Post
Enter the text on the right:
 visual captcha
Comment: *
* Required field. In order to be approved for display, comments must have a first and last name and a city.
** E-mails are required and will only be used for internal purposes.

Most visited in Business Listings

Hotel booking
The Prague Post Online contains a selection of articles that have been printed in
The Prague Post, a weekly newspaper published in the Czech Republic.
To subscribe to the print paper, click here.
Unauthorized reproduction is strictly prohibited.