Draft for review. Drag the slider, and tell Keaton anything that looks wrong.

Who gets the keys

When the building is worth less than its loans, who ends up owning it?

A resort cost $100.0M: a $50.0M senior loan, a $35.0M mezz loan, and $15.0M from the owners, and every loan is in default. The safest money sits on top in this picture, so losses fill it from the bottom like water. Drag how much the resort has lost and watch who ends up with the keys.

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The stack, who put money in, and who owns what. Under the blue water is lost.

The resort{{ worthText }} {{ resort.state }}

Lost

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Senior lender Lent $50.0M. Holds a mortgage on the resort. {{ senL.state }}

Mezz lender Lent $35.0M. Holds the Holding company’s shares. {{ mezzL.state }}

Owners {{ own.state }}

Resort company Senior borrower. Owns the resort. {{ resCo.state }}

Holding company Mezz borrower. Owns the Resort company. {{ hold.state }}

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Keys{{ takeover.s3 }}

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What just happened

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Relevant formulas

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Every loan here is in default. The mezz lender’s collateral is shares, so it sells them at a UCC sale with no court. The senior lender’s collateral is the resort, so it forecloses under state law. A lender can bid what it is owed without bringing cash, so nobody outbids it when the collateral is worth less than the loan. The numbers are the Snowmass case from class, rounded.

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