Re-Energizing an Injunctive Remedy to Stop UCC Foreclosures

March 23, 2021 – As the commercial real estate market continues to recover and adapt to the new landscape brought about during the last year, hopes for a turnaround, expedient or otherwise, seem to have hit another bump in the road with a recent court decision that could begin to impede borrowers’ abilities to seek injunctive relief to stop a foreclosure sale.  

In an article published by the New York Law Journal on March 19, 2021 entitled, “Re-energizing an Injunctive Remedy to Stop UCC Foreclosures,” Business Litigation Partners Y. David Scharf, Hon. David B. Saxe, (ret.), and Aaron B. Lauchheimer comment on the First Department decision in Shelbourne BRF v. SR 677 Bway, where the First Department determined that Plaintiff, a mezzanine borrower that defaulted under a mezzanine loan, did not meet the requirements under the preliminary injunction test and related irreparable harm which would have enjoined lenders from proceeding with a UCC foreclosure sale. As lenders are racing to conduct UCC foreclosure sales, many times to take control of distressed real estate assets at fire-sale prices, the UCC statutory protection afforded to borrowers is more important than ever.