First Republic Bank Collapsed and Acquired by JPMorgan Chase in Second Largest U.S. Bank Failure
On May 1, 2023, the Federal Deposit Insurance Corporation (“FDIC”) announced that First Republic Bank has been seized and closed by regulator California Department of Financial Protection and Innovation, taken over by the FDIC and sold to JPMorgan Chase. This made First Republic Bank the latest casualty of the 2023 global banking crisis and the second largest U.S. bank failure following the recent collapse of Silvergate Bank, Silicon Valley Bank and Signature Bank. But does this mark the end of the 2023 global banking crisis?
How to Protect Yourself in the Banking Crisis
R&E is continuing to monitor these developments as we actively work with clients to assess their risks and advise them. R&E is at the forefront of (1) formulating strategies for landlords concerned about tenants’ liquidity and access to letters of credit, (2) advising lenders and borrowers concerned about access to deposits and liquidity, and (3) guiding other businesses concerned about the present and potential future impact of this historical string of bank failures. R&E recommends that you conduct a review of any letters of credit that you are holding as security under a lease to ensure that the current credit rating of the issuing banks conforms with the relevant lease requirements. Feel free to contact R&E with any questions that you may have or to seek any other assistance that you may require.
May 9, 2023 Bankruptcy Auction for East Village Theatre 80
The 58-year-old Theatre 80 has been in bankruptcy since December 2020, and its 14,400 sq. ft. mixed used building located at 78-80 St Marks Place, New York, NY 10003 is scheduled to be auctioned and sold off on May 9, 2023 at 11:00 a.m. ET to satisfy a defaulted loan in the original amount of over $6 million held by real estate firm Maverick Real Estate Partners. Details available from the auctioneer firm’s webpage.
U.S. Corporate Bankruptcy Filings Rising in 1st Quarter of 2023
Multiple sources report that U.S. corporate bankruptcies are rising in 2023 with the first two months of 2023 reflecting the highest total for any comparable period since 2011 and a substantial increase in commercial Chapter 11 filings:
- US corporate bankruptcy filings hit 12-year high in first 2 months of 2023 (S&P Global Market Intelligence)
- Bankruptcy Filings Increase Across All Chapters in March; Commercial Filings Up 79 Percent Year-over-year (EPIQ News)
- Corporate bankruptcies jumped in Q1 (AXIOS)
How to Protect Yourself in Bankruptcy
R&E recommends that now is a good time for you to conduct a review of any contract, loan or security agreement that you may have with a potentially troubled counterparty. R&E frequently represents landlords, lenders and other parties in large to middle market bankruptcies across various industries. We are adept at assessing risks, evaluating rights, and formulating strategies for recovery and liquidity concerns. R&E can advise you how best to access and apply security deposits or letters of credit, and we can guide you through the present and potential future impact of the unique challenges in this economic climate. Feel free to contact R&E to help navigate you through these concerning times.