A/B Tranching of Commercial Real Estate – Secured Loans: An ...

B Holder’s Purchase Option
• This option may be based on the expectation that it should result in
no skin off the nose of the more senior holder.
• However, if the B holder becomes a debtor in a bankruptcy case, the
purchase option may be regarded as an executory contract of the B
holder that cannot be terminated (including through foreclosure upon
the loan) without obtaining relief from the automatic stay in the B
holder’s bankruptcy case.
40