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JMBM assists CMR Mortgage Fund LLC in closing a nearly $100 million loan to out-of-possession debtor in a Chapter 7 bankruptcy

On behalf of its client, CMR Mortgage Fund, LLC (CMR), of San Francisco, California, Jeffer, Mangels, Butler & Marmaro LLP (JMBM), a California full-service law firm with expertise in complex real estate sales, financings, work-outs, and bankruptcies, has closed a nearly $100 million loan to Halekua Development Corporation (Halekua), an out-of-possession debtor in a Chapter 7 bankruptcy case pending in Honolulu, Hawaii.

The loan enabled Halekua to redeem from its bankruptcy estate approximately 161 acres of land known as Royal Kunia Phase II, located 30 minutes west of Honolulu, that it owned when it went into bankruptcy nearly four years ago. The loan also provides financing to Halekua for predevelopment and infrastructure costs going forward as it proceeds to develop a 2,000-home master-planned community on the site.

“This was the most complicated loan transaction, both from a business and legal perspective, on which I have ever worked,” said Robert B. Kaplan of JMBM’s San Francisco office, a 30-year legal veteran, one of the firm’s lead insolvency partners, and head of its team for the project. “In order to successfully close the loan, we had to address – concurrently and appropriately – complex, interrelated issues involving bankruptcy and creditor’s rights; corporate organization and formation; real estate finance, purchase, and development transactions; and land use and environmental matters.”

CMR is the arranger of the financing and the “B” lender therein; and Canpartners Realty Holding Company IV, LLC, managed by Canyon Capital Realty Advisors, LLC, of Beverly Hills, California, is the “A” lender and the agent for the lenders. Sidley Austin LLP was principal counsel to Canyon in the transaction.