Courts: A Foreclosure Pandemic Pause? (Part 3)

Since the start of the COVID-19 pandemic, borrowers and lenders alike have sought clarity regarding the permissibility of UCC foreclosure sales in the midst of the ongoing pandemic and the resulting economic fallout, as courts continue to grapple with vague legislation and the question of whether or not a "commercially reasonable" sale (a requirement for disposition of collateral under the UCC) is plausible under current circumstances. A recent decision by the Appellate Division, First Department ("First Department"), however, should provide a sliver of hope for mezzanine lenders seeking to proceed with a UCC foreclosure sale during these challenging times.

In August 2020, the New York Supreme Court issued a preliminary injunction to preclude a mezzanine lender from proceeding with the UCC foreclosure of membership interests in the owner of an office building in Albany, New York, citing an Administrative Order issued by the New York Court of Appeals on July 23, 2020