Case Study #4

The Client:

An Individual Investor

The Situation:

This investor, through his single-member limited liability company (LLC), owed the lender $4,675,000. The special-purpose building had been vacant for some time and the investor was making the monthly payments to the lender as well as maintaining the property from his personal funds. His goal was to achieve a loan modification reducing his monthly cash outlay until the building could be released.

The Solution:

Peak Asset Solutions was able to successfully negotiate a loan modification reducing the principal balance of the loan to $3,000,000 thereby saving the borrower $1,675,000. In turn, the investor agreed to personally guaranty the reduced principal balance which provided an additional source of repayment for the lender. 

Extensive consultation with the borrower’s tax professionals resulted in a reduction in the basis of another property owned by the LLC thus avoiding the ordinary income tax consequence that otherwise would have resulted from the debt forgiveness.