Tough Times for Lenders : Financial Services Lawyer & Attorney : Winstead Law Firm : Finance, Banking, Bankruptcy

Recently the IRS corrected a mistake inadvertently created by it in September 2009, when it made changes to the REMIC rules governing changes to CMBS loans.  One result of the 2009 change was that partial releases, expressly contemplated in the CMBS loan document, must pass the “principally secured by real estate” test for qualified mortgages at the time of the partial release (see Section 860G(a)(3)(A) of the Internal Revenue Code and Section 1.860G-2(a)(8) of the Income Tax Regulations).

Failing this test could result in the CMBS pool losing its status as a REMIC, which would have horrible consequences to the tax-free status of the CMBS trust.

Thus, the loan servicer was placed in a no-win situation: the borrower had a right to a partial lien release under the loan documents; yet doing so would violate REMIC rules and the servicer's agreement (in the servicing agreement) to comply with REMIC rules.  (Loss of tax-free status for the trust = heads roll at the loan servicer).

The borrower, of course, was not interested in the loan servicer's problem; it simply wanted the benefit of the bargain (see CMBS gripes of borrowers).  (Sounds like a personal problem of the loan servicer.)

The IRS' new Revenue Procedure 2010-30 gives guidance on this problem and details how the IRS will provide relief for loan modifications of CMBS loans that are “grandfathered qualified mortgages” and “qualified pay-down transactions.”

The Revenue Procedure provides that a partial lien release will be a "grandfathered modification" if:

• it occurs by operation of the terms of the debt instrument, and
• the terms providing for the lien release are contained in a contract that was executed no later than December 6, 2010.

The Revenue Procedure defines a "qualified pay-down transaction" as a transaction in which a lien is released on an interest in real property and which includes a payment by the borrower resulting in a reduction in the adjusted issue price of the loan by a qualified amount.

So, if the CMBS loan expressly permits a partial release of a portion of the property upon the payment of a partial release price (all as expressly specified in the loan documents), then the CMBS loan servicer may go forward with the partial release.

This is good news.

Nice to have good news.

It is interesting that the IRS does not address this request: dropping the requirement for a  retesting of collateral released when a loan is in default.  This request was made by industry organizations in order to give CMBS special servicers additional flexibility as they deal with defaulted CMBS loans.

If you have a war story on this topic, or simply want to comment, please post it below.

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This is a series of blog entries in which we provide some quick answers to lenders' frequently asked questions (FAQ).

Borrower's failure to pay property tax liens often is a good indicator that the loan, and the collateral, are in trouble; and that soon, Borrower will fail to pay the scheduled installments on the loan.

So, a lender or a loan servicer should add these topics to the task list: (i) monitor state tax due dates, and then (ii) dealing with property taxes (if they are not paid).

This topic is very state-specific in that each state seems to have its own rules on this topic.  Even with that important qualification, these general statements will get you started on this important topic -

FAQ #38 - Should Lender pay off state property taxes before foreclosure?

• If the loan documents permit the Lender to pay these taxes (and this should be permitted under the loan documents - but read the loan documents to confirm this), then Lender should pay unpaid property taxes prior to foreclosure in order to include such advances in the loan, and thereby increase the amount of any deficiency.

FAQ #39 - What happens to State tax liens after a foreclosure; do they "survive" a foreclosure or does the foreclosure extinguish the state tax liens (wipe them out)?

• Ad valorem taxes encumber the property with unique powers.  So, in Texas they are "super liens" and have priority over prior mortgage liens.  This means that they are not extinguished by the foreclosure (meaning that they do not "go away").  Thus the importance for you to consider #38 above.

To read the entire Tough Times "FAQ" series, please click here.

Two things should be kept in mind. First, none of these questions can be answered in a vacuum. Questions should be considered with a thorough review of the file and an interview with appropriate loan officers. And secondly, many of the questions are worth revisiting from time to time because subsequent events will impact the answers.

If you have thoughts, suggestions or questions on this topic, please post a comment below.
 

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As I've commented previously, Congress has been contemplating imposing a stiff tax increase on the "carried interest" or a developer's "promote" in real estate deals; and a long, long list of commercial real estate industry organizations have been fighting to stop the tax increase.

This tax would be a real hardship on commercial real estate, and consequently would result in even more tough times for lenders.  (And of course, Congress is looking for ways to raise money in order to combat the deficit.)

Here's some good news in troubled times for commercial real estate: the tax increase on carried interest is dead (for the immediate future).

Recall that the House passed its version of the tax increase (H.R. 4123; The American Jobs and Closing Tax Loopholes Act ) in late May.  Here is the summary of the House bill by the Mortgage Bankers Association:

"Under the House-passed bill, 50 percent of any carried interest that does not reflect a return on investment capital would be taxed at the significantly higher income tax rate (up to 35 percent), instead of as long-term capital gains, which are taxed at 15 percent. In 2013, the portion of carried interest taxed at the higher rate would climb to 75 percent. The Joint Economic Committee has found that this provision would raise taxes by $18.7 billion over the next 10 years."

Distressed borrowers and lenders alike now can sigh a (small) sigh of relief . . .  because on last Thursday (June 24), the Senate failed for a third time (it was try, try and try again) to persuade 60 Senators to support the bill.  Here is the summary and announcement from the National Multi Housing Council:

". . . Senator Max Baucus (D-MT) twice modified the carried interest proposal to try to make it more palatable to real estate partnerships. 

The latest iteration would have taxed 75% of a carried interest at ordinary income rates and 25% at capital gains rates as of 2011. A carried interest attributable to assets held for at least five years would have been taxed at a 50-50 split. The language was also modified to exempt family partnerships who allocate carried interests on a pro-rata basis from the tax law change. Those partnerships would have continued to be taxed at capital gains levels. 

While the most immediate threat appears to have passed, NAA/NMHC remain vigilant as the Senate could take up the extenders bill again in the fall, and carried interest remains a possible "pay for" for other forthcoming legislation."

I know that this is this is the "tough times" blog, where things are always suppose to be dark and . . . hopeless - or at least coated in a thick layer of winter gray.  But, this is good news . . . .

It is nice to have some good news.

And kudos to Steve Church of JLL for bringing this "news" to my attention.

If you have any comments or other perspectives on this, please post a comment.

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While the nature of the collateral securing a loan may change, while the local market may change, while the number and nature of the lenders in the credit stack may change, while "X" (you fill in the  "X") may change, ONE thing never changes . . . . 

. . . income taxes.

And I suspect that the impact of debt restructures (and foreclosures) on income taxes will become more and more important in the future.  But let's not overlook the importance of this topic today.

In prior postings, we've touched on the importance of income tax issues, including cancellation of debt income and other "bad" consequences [2nd of two postings].

Below is a list furnished by a partner of mine, Julie Sassenrath.  Julie has in-depth knowledge of the tax code, case law and IRS rulings, and has a very, very practical bent.  She uses variations of this list as a starting point to assess the tax consequences of a specific workout or foreclosure.

Collecting this information often is a key element in any debt restructuring plan, whether you are the key principal behind the borrower, or the asset manager pursuing the recovery of the Lender's investment.

Here is Julie's quick list:

• Amount of debt (principal and accrued but unpaid interest)
• Has accrued but unpaid interest been deducted?
• Recourse v. non-recourse nature of the debt
• Guarantors or other persons liable for debt (and relationship to partners), and nature of liability
• Basis of the property (collateral)
• Basis of partnership interests of the partners
• How has the debt been allocated among the partners for tax/basis purposes?
• Identity of the partners (and their partners if a partnership) and ownership interests
• Financial status of each partner (solvent, insolvent, bankrupt, etc.)
• Tax attributes of each partner (NOLs, passive losses, capital losses, etc.) and overall tax picture of each partner
• Other real estate interests held by each partner
• Other assets held by the partnership
• Fair market value of the property (collateral)

If and when you focus on income taxes in a plan, be sure to contact an experienced adviser.

Frankly, I am NOT familiar with this topic.  When faced with this topic, I quickly reach out to Julie or another tax lawyer at my law firm for help.

If you have information or questions to add to this list, please post a comment below.

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Here's a very, very interesting announcement from the CREF-C.  It covers an important issue in every distressed debt situation: the tax picture of the borrower.

From the CREF-C:

• "The Senate Committee on Finance has proposed a substitute amendment to the House-passed H.R. 4213, The American Jobs and Closing Tax Loopholes Act, which would soften (but not eliminate) the tax provision related to "carried interest" for real estate partnerships.  The issue remains a high priority for many real estate trade associations, particularly commercial borrower groups.  For its part, the CRE Finance Council has supported coalition efforts, including a letter along with other trade groups urging Members of Congress to vote against the tax increases for carried interest."
• The other trade groups?
  • American Hotel & Lodging Association
  • American Resort Development Association
  • American Seniors Housing Association
  • Building Owners and Managers Association International
  • CRE Finance Council
  • Council for Affordable and Rural Housing
  • International Council of Shopping Centers
  • NAIOP, The Commercial Real Estate Development Assn.
  • National Apartment Association
  • National Association of Home Builders
  • National Association of Real Estate Investment Managers
  • National Multi Housing Council
  • The Real Estate Roundtable

If you have links to other commentary on this legislation, or want to post your own comments, please do so below.

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 Our friends at Cantrell McCulloch [link to website] bring to our attention a topic that could literally be a “drag” on your collateral: the valuation given to the collateral by the applicable taxing authorities (public and private).

Taxing authorities could be state, county, city, hospital, school, road and other governmental authorities; and also “private” (not governmental) bodies in instances, for example, where fees are “spread” among multiple lots or parcels pursuant to private agreements (such as deed restrictions).

When you stop and think about it, you’ve probably seen line items in operating budgets for taxes and assessments, but have you stopped to consider whether the borrower has actively protested or tried to lower the valuation that provides the basis for the cost? And, have you (as lender or servicer) investigated and considered your ability to lower valuation PRIOR to taking title to the collateral?

I know, you’re thinking: “surely the borrower has investigated the tax valuation of the property.”

Maybe. Maybe not.

Often, borrowers have much, much larger fires to fight; and devoting a reduced staff to reducing property valuation so as to save money in the FUTURE is, well, not important when the borrower is fighting simply to keep afloat today – and keep the property.

So, my suggestion simply is to add this topic to your workout check list, and include the following as tasks directed at this ticking sound:

• What taxes or assessments cover or encumber the collaterals? Governmental (per a current search of applicable governmental taxing offices)? Private (per a current title report)?
• What valuation has been given to the collateral? (Is it high?)
• How is valuation determined?
• What are the key dates (Due dates? Appeal dates? Etc.)
• Has the owner\borrower contested the valuation? Are written agreements covering valuation in place?
• Is it possible to file a “late” appeal? Are there special conditions for filing a late appeal?
• What input or role does the lender\servicer have in the valuation determination or appeal process? (Under applicable law or regulations? Under the loan documents?)

Todd Franks (with The Cantrell Company) tells me that they have recovered over $100,000 in overpaid property taxes for one loan servicer, after a borrower failed to timely protest their 2008 property tax valuation (in a situation involving Texas real property collateral). His experience is that if the current owner is unsophisticated and\or unfamiliar with the property valuation process, then when the owner is struggling to keep the property and to avoid a loan default or a foreclosure, many owners simply give up on contesting property valuations handed out by taxing authorities. (The result: it is a problem discovered by you AFTER you take title.)

Clearly, this topic qualifies as another one of my “ticking sounds” –  topics inherent in real property collateral that can jump up and bite you during and after a loan falls into distress. (For other “ticking” topics, search this blog using the search term “ticking” in the search box on the lower right side of the page.)

Put this topic on your check list.

And follow up with Todd Frank (at tfranks@cantrellcompany.com) if you’d like to talk with him.

Finally, as always, if you have any questions, comments or practical advice on this topic, please post a comment.

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This is a special series of blog entries in which we provide some quick answers to lenders' frequently asked questions (FAQ). Two things should be kept in mind.  First, none of these questions can be answered in a vacuum.  Questions should be considered with a thorough review of the file and an interview with appropriate loan officers.  And secondly, many of the questions are worth revisiting from time to time because subsequent events will impact the answers.

FAQ #7 - Should I pay the property taxes prior to foreclosure?
Taxes and Escrows: Escrows may be in your possession and available for tax payments.  Taxes should typically be paid prior to foreclosure in order to add them to the loan deficiency amount--unless it is your plan to sell at the close, subject to taxes to a third party.

FAQ #8 - What other legal issues or hurdles should I consider in proceeding with foreclosure
Each state's law governs when and how a lender proceeds with foreclosure.  The following questions should be considered:

• Is there an anti-deficiency statute or single cause of action rule?
• What are the mechanics lien filing periods?
• What are the content and timing requirements for sending notice of default and acceleration?
• How does my course of dealing affect the existence of the default?

To read the entire Tough Times FAQ series, please click here.
 

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Every downturn and recovery offer opportunities for investors to adapt and respond to changing economic conditions.  Today's climate requires investors to look for commercial real estate opportunities in new and challenging ways.  Investing in distressed assets presents investors with one opportunity for growth as market conditions improve.  Winstead PC and Cohen Financial hosted a webinar covering topics important to implementing an investment strategy in this difficult market.

Did you miss the webcast?
Don't worry, one reason that you follow this blog is to gather information on your own terms, and on your own schedule. 

• Click here to watch the webcast
  
• Click here for a copy of the presentation materials

After you watch this webcast or read the materials, please post comments or questions.
 

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Periodically, we alert you of opportunities to participate in online webinars on various topics—from the "comfort" of your own computer.  No travel.  No hassle.

On Wednesday, October 7, Cohen Financial and Winstead PC are hosting a webinar on investing in distressed assets.

Every downturn and recovery offer opportunities for investors to adapt and respond to changing economic conditions.  Today's climate requires investors to look for commercial real estate opportunities in new and challenging ways.

Investing in distressed assets presents investors with one opportunity for growth as market conditions improve.  The professionals at Cohen Financial and Winstead PC will present you with the knowledge needed to evaluate this investment strategy.

During this webinar you will learn:

• How to find distressed commercial real estate assets
• What is involved in the valuation and financing of these assets
• How to buy debt
• How to buy commercial real estate
• The tax issues involve

Investing in Distressed Assets – Webinar

Wednesday, October 7, 2009
11:30am PT/12:30pm MT
1:30pm CT/2:30pm ET
Click here to register (link)

This webinar should interest players from every point or perspective, whether sellers, buyers, special servicers\asset managers, REO\asset managers, or intermediaries.

If you have questions in advance, please post a comment.

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Sick and beyond tired of the inflexibility of CMBS servicers in making needed modifications to CMBS loans that we all know are in the ditch?  Help might be here:

On September 15, 2009, the IRS and the Department of the Treasury issued three pieces of guidance relating to commercial mortgage loans held by a securitization vehicle (a CMBS loan).

• The final rules (see PDF entitled "TD 9463") regarding "Modifications of Commercial Mortgage Loans Held by a Real Estate Mortgage Investment Conduit (REMIC)" include changes in collateral, guarantees, credit enhancement of an obligation and changes to the recourse nature of an obligation.  These rules expand the list of exceptions that will not be considered "significant modifications" of a CMBS loan obligation held by a REMIC.
  
• The IRS also issued Revenue Procedure 2009-45 (PDF), which is a final ruling that describes the conditions under which modifications to certain mortgage loans will not cause the IRS to challenge the tax status of REMICs.  Specifically, note the factor that allows a servicer to take action more than one year prior to maturity.  Furthermore, a servicer is able to rely on information provided by the borrower unless it has knowledge to the contrary.  More importantly, while past performance of the loan is a factor in assessing risk, a "significant risk of default" (based upon a "reasonable" belief standard) can be found by the holder or servicer even if the loan is currently performing (This is great news for principals who are keeping the loan payments current from sources other than rent).
  
• In addition, the IRS and Treasury issued Notice 2009-79 (PDF) and are requesting comments on what additional guidance, if any, is needed regarding modifications of commercial mortgage loans held by investment trusts.

Additional information can be found on the CMSA's Web site (link to REMIC Reform).

Hopefully, these guidelines will allow CMBS loan servicers and borrowers greater flexibility to assess risk and allow for appropriate modifications to CMBS loans.  It is desperately needed.

We know that the public is in no mood to support a "rescue" plan for commercial real estate.  Maybe,  just maybe, "tweaking" the tax code like this will be the approach that will be taken by the government—sort of a "back door" rescue plan for commercial real estate.  However, I believe that it'll take much, much more than tweaks like this one to help commercial real estate to QUICKLY recover.

Kudos to the broad cross section of the commercial real estate industry that worked on this initiative (Mortgage Bankers Association, Commercial Mortgage Securities Association, ICSC, Real Estate Roundtable, and others).

If you have any questions or other information, please post a comment.

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Periodically, we post commentary on this important topic.  Frankly, it can literally drive the structure of a workout, and most certainly the timing of it.

And as painful as this is to admit (because I've really started to like writing on ToughTimes), reading this text might be a little "dry" or even tiresome (although I do try to spice this up—but within the boundaries of the "law firm thing").

As a change of pace, Mike Cook , who authored several pieces previously posted, will host a webinar on this topic.  The information is below, and I have attached the "official" invitation.  So, if you like a more formal approach, download the invite (PDF).

Please freely forward this blog entry or "official" invitation to anyone interested in this topic.

Note that unlike this blog, the webinar is NOT free.  However, the $12\screen charge is the cost charged to us by the 3rd party service provider—there is no profit in it for us.

If you have other topics that you think will merit a webinar, please post a comment. 

Federal Tax Treatment of Debt Workouts

When: Wednesday, September 16, 2009 at 10:00 a.m. - 11:00 a.m. CST
Speaker: Michael L. Cook, Winstead PC

Description: This webinar will highlight certain federal income tax consequences to debtors and lenders in the context of debt workouts (including cancellation of debt (COD)income, exceptions to COD income, and the tax consequences of foreclosures and deeds in lieu of foreclosure), including the 2009 legislative changes allowing an election defer COD income.

Who Should Attend: 
Accounting professionals, tax professionals, in-house legal counsel and consultants

Register by September 14 at:
http://www.winstead.com/CEWebinarSeries

$12.00 registration fee per computer screen
Payable via major credit card

Webinar instructions will be sent upon registration
**  Participants must have a Java-enabled browser  **

Continuing Education Credit Information
Texas Bar CLE: 1 credit hour
CPE: 1 credit hour

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Guest Writer - Mike Cook, Winstead PC

2nd in a series of 2 postings
(Part 1: The Insolvency Exclusion to Cancellation of Debt (COD) Income;
The Effect of Exempt Assets Under the Carlson Rule)

The Court, having determined that the use of “assets” was ambiguous, pointed out that “[t]he stated purpose of the 1980 Bankruptcy Tax Act was to ‘accommodate bankruptcy policy and tax policy.’” Both Senate and House reports indicate that the proposed insolvency exception in Section 108(a)(1)(B) was intended to ensure that an insolvent debtor outside of bankruptcy (like a debtor coming out of bankruptcy who is accorded a ‘fresh start’ under Federal bankruptcy laws) is not to be burdened with an immediate tax liability.

The Tax Court, however, concluded that although an asset of a debtor may be exempt from the claims of creditors under applicable law, if that asset and the debtor’s other assets exceed the debtor’s liabilities, the debtor has the ability to pay an immediate tax on income from discharged indebtedness. By implication, therefore, the same Congress that decided that it was in the public interest that exempt assets be removed from the reach of creditors so that debtors could obtain a fresh start intended, nevertheless, to impose an income tax on the value of those assets in the event that a taxpayer negotiated a debt settlement with creditors outside of bankruptcy. In effect, the Carlson Court concluded that Congress intended to impose a penalty on taxpayers that handled their financial problems without resorting to the bankruptcy court.

Under the Carlson rule, an individual with substantial exempt assets pays a high penalty for not filing bankruptcy. The opposite viewpoint, however, is that the reason the Tax Court has sided with the government is because the cases from the late 1980s showed the gross disparity in tax treatment that could occur from the differences in exempt assets allowed from state to state. In Texas, a person with substantial exempt assets could successfully take an insolvency position under the old law. It should be noted that only the Tax Court has addressed the issue, and if the economic conditions currently being experienced produce the same quantity of workouts from commercial debt (COD from residential loans is currently excluded from gross income) as occurred in the 1980s, the issue of whether exempt assets should be excluded from the insolvency calculation will surely reach several courts of appeal.
 

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Guest Writer - Mike Cook, Winstead PC

Part 1 of 2

During the current economic crisis, debtors will be negotiating workouts with lenders and if the debtors successfully obtain debt relief, they will also be seeking tax relief from the taxation of COD income. The ability to use the broadest exclusion from COD income, the insolvency exclusion, has been severely restricted in recent years. The relief from taxation of COD income by reason of insolvency of a taxpayer has a common law history, but it was codified in 1980 as Section 108(a)(1)(B) of the Internal Revenue Code. The legislative history of the Bankruptcy Tax Act of 1980 made it clear that a purpose of the statutory insolvency exclusion was to put insolvent taxpayers on the same footing as those who filed bankruptcy, which also excludes COD income from taxation. But recently the Tax Court has penalized taxpayers for not filing bankruptcy; the insolvency exclusion does not now produce the same tax results as does bankruptcy. So are debtors better off filing bankruptcy than entering into a debt settlement with lenders?

When an individual files bankruptcy and is relieved of personal liability, the debtor comes out of bankruptcy with his/her exempt assets and there is no taxation of the relief of liability because COD is not income pursuant to Section 108(a)(1)(A). In the late 1980s, when the banking and real estate industries collapsed in the southwest United States, taxpayers relied on old case law to the effect that their exempt assets were not included in the insolvency calculation. The IRS seemed to back away from its initial litigating position and agreed with the taxpayers’ exempt asset position, but in the 1990s the IRS put taxpayers on notice that its position was that the insolvency calculation should be calculated without inclusion of the exempt assets. The Tax Court subsequently addressed the issue in Carlson v Commissioner, 116 T.C. 87 (2001) and it adopted the IRS’ position.

The Carlson Court noted with some frustration that Congress did not define the word “insolvency” or “assets” as used in Section 108(a)(1)(B) and turned to several dictionaries to find the meaning of “asset.” The court noted three definitions: (i) the property of a deceased person subject by law to the payment of his or her debts and legacies; (ii) the entire property of a person, association, corporation, or estate applicable or subject to the payment of debts; and (iii) the items on a balance sheet showing the book value of property owned. The first two definitions support an exclusion of exempt assets while the third definition supports an inclusion.

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Over the last 8 months, we've blogged in October from the EU, where we attended a real estate convention and visited with several clients (link to last day), and then in February from the MBA-CREF convention in San Diego (link to last day),

This week, we're attending the MBA's Servicing & Technology Conference in New Orleans.  This will be my 9th or 10th time at this conference.  In the past, the focus at each conference has been the nuts'n bolts of master servicing (i.e., servicing performing loans after loan origination) and the growing use of technology as the servicing backbone.  Bread and butter stuff, with a growing awareness that technology could make significant improvements to the production and servicing model.

Each year at this conference, the special servicing "naysayers" (i.e., those handling the servicing of distressed loans) darkly predicted that the loan production party was about to end - that the workouts surely were about to start.  Surely.  Sometime.  Simply a matter of time . . . .

Well, it has ended, and the conference this week has a heavy focus on distressed debt.  Broadly stated, here is a quick, high-level summary of the topics to be covered at the conference:

• Loan workouts and restructures
• Default management and delinquencies
• Risk mitigation
• Insurance issues
• Bankruptcy & receivership
• Accounting & tax issues (including REMIC issues & implications)
• Servicing issues in a changing environment
• Transparency issues
• Issues in foreclosure

As it turns out, this conference completes a trifecta for us - this is the last of  three meetings which, when taken together, would be fertile material for Shakespeare:

• Act One: The Global Hurricane Hits (our EU experience)
• Act Two: Loan Production in the Big Ditch (our MBA-CREF experience)
• Act Three: Special Servicers to the Rescue (this week in New Orleans)

Stay tuned.  I'll be posting from the conference.  And I suspect that we'll be collecting materials for many more postings after this week.

P.S.: OK, so I snuck into town several days before the conference - simply to eat and sleep.  Top restaurants so far - on two extremes:

• Jacques-Imo's: full of locals for a funky, affordable creole & cajun food (eat with the locals); 30 minute ride on the St. Charles Street car from downtown (more fun)
• Nola: great food but expensive (relative to Jacques-Imos); white table cloth

If you have any questions or comments for us to investigate while we're at the conference, please post a comment.

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A straw in the wind; tax consequences will form the battleground, and be very actively in play on the negotiation table between owners, with relatively low adjusted basis in their commercial real estate projects, and lenders attempting to foreclose or otherwise enforce their lien rights with respect to commercial real property. Foreclosure as a triggering event for the imposition of capital gains taxes and lenders' ability to forgive recourse debt obligations (thereby creating either capital gain or ordinary income tax consequences to the borrower) will both be tools for some lively negotiations going forward in the work out process.
 

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