No - not redemption in the sense of saving your soul. More a spectator sport, when you consider the Splat called Ramsey Town Center.
PiPress wrote of James Deal, owning acreage and buildings, considering more at Town Center. Price, expectations, and terms and conditions sought or expected by Mr. Deal not being matters of public knowledge.
But this real estate redemption game is where lawyers could tell you war stories - more than I could. However, if you go to the state law library site, this search, and read some of the cases you can get a flavor for the complications that are possible.
Without analyzing, consider a hypothetical, totally made up numbers for illustrative purposes, but enough to show complications. All an entirely hypothetical scenario.
Say, the City has a lis pendens and suit involving the bank, 150 acres, $35 million debt - a foreclosure, perhaps, perhaps not.
With a lis pendens, you buy at sheriff's sale, subject to risk of outcome of the litigation. Then if you buy; can the bank simply walk away, tank the case. or does the bank have to step aside and let you take the litigation position - does the defense run with the land?
That's one set of complications.
Another set is if the bank buys. If it bids more than its owed, it has to pay out money, so it will bid up to its debt, and if someone bids a dollar more, then the bank is paid off and cashed out.
Would the bank bid less than the amount of its debt? If they bid less, then a redemption position can redeem, for what the bank bid, so if it wants the property it bids its judgment - and if it wants a partial cashout and nobody else bid enought at the sheriff's sale it can bid less than the judgment, in hopes that the lower pricetag might attract redemptioner interest. Getting sixty cents on the dollar is better than nothing.
Anyone with a lien junior to the bank's position would face having its security position closed out if it does not redeem; and since there's no solvent debtor to chase, it loses what it's risked if it does not redeem.
But as with a purchaser at sheriff's sale, a redemtioner would take subject to the risk of outcome of the litigation. So the lis pendens is an ongoing complicating hammer. Of sorts.
The Sakry article quoted James Norman about liens starting to be filed in the fall of 2006 - hey, we heard nothing but an election was pending, so why put out info that could affect how folks vote? And that is why there probably was not much of a public hum back then. You would have to buy a title abstract or ferret out records at the recorder's office, then or now, to know anything not being reported by the City or the press. Anyway, James, he noticed liens then, - he said so to Sakry - at least.
Well, part of the distressed land apparently is Abstract property, part Torrens.
Were some liens perfected correctly for the one, but not the other? Another complication, for now, for later.
Say that junior to the mortgage, there are Contractor A, on the hook for an unpaid $1 million; contractors B, C, and D with priorities in that order, each for $0.5 million; and E, for $2000. E is lucky to not be in deeper, but is the end man. Is that good or bad? It depends - and that's a complication.
Each lien holder, for a fixed time, and meeting correct procedures, can redeem. But if you are B, and redeem, and C wants to protect itself, it has to redeem from B, paying the sale price plus the amount of B's senior lien. IF E redeems and the others don't want to risk things, after a lapse of a proper period of time with nobody buying out E, the other intervening liens are wiped out.
I think all that is correct so far. Ask a lawyer to be sure.
Here's where I am not entirely comfortable. E buys for $10 million, C redeems by paying E $10 million, not having to pay the $2000 because the E lien is junior to C; but then E can redeem again, paying $10,500,000 to C, because E is junior to C and has to cash out the C lien position and pay the purchase price, in order to be able to redeem - then I think E keeps, if sufficient time lapses. Before a lapse, D could redeem, paying what E paid, and E could redeem again, paying what D paid plus the amount of D's lien. At some point nonredeeming, non-players or those folding their hand, have their positions expire without participating to protect the position - some lawyer, tell me if I am wrong in any of that, the email address is at the start of the profile, top right-hand sidebar.
Now, White Knight, bank, and city sit at a table and try to work out a deal - closing out from negotiations each of the lien positions. Well any deal they cut will have to involve a sheriff's sale and all the A, B, C etc. is a risk their deal would face.
So, you are playing with that kind of money, you have to buy the junior liens at how many cents per dollar you can convince them to take. Or risk a deal being pulled like a rug, from under you. Or you can get cute - go and say for $500 buy the E position, as White Knight. Then an agreed sale, say for $5 million cash which the bank will get, plus White Knight agrees to take a $10 million loan from the bank to have working money, and add a wrinkle for fun, half the ten million is without personal recourse, secured by the property only, half with White Knight personally on the hook for it - that kind of give and take - and say it is a drawing account which you may or may not fully draw down -- some such deal.
Then C comes in and messes it up with a redemption.
As white knight you still hold the most junior position, E, and can always redeem back, but each time it costs you and each other lien holder has a will to protect its stake, balanced against - what if I redeem, and white knight hikes instead of using position E against me, then I am out millions and hold a distressed property.
The complications are stranger - if you only have a redemption right for half of the land, the Abstract half, but you did not perfect your lien in a timely way against the Torrens half.
Then, as bank, what if you had a discretionary drawing account, and after a couple of the liens had been filed you allowed further draws? Are those draws junior to the intervening liens? In some states yes, in some states no, and Minnesota agrees with its friends - I believe discrtionary draws become junior to intervening liens in Minnesota - but ask a lawyer if you want something to rely on.
And throw in this, between redemptions, an intermediate holder allows F to work on the property unpaid - what is F's position then - and how is holding E's position affected? You tell me. I asked first.
So --- That opening chess position, endgame. If white knight moves first, the win is easy. If black moves first, it's a bit harder to analyze and stalemate's perhaps possible. But if instead of an endgame at the foreclosure - what if what you really face at foreclosure is more like an opening as below - who wins regardless of who moves next from that position is why tournaments exist. Too many moves ahead, too many options, etc.
Bottom line: Even when you want to be the white knight, things need not be simple. The Lone Ranger never had it this hard as the City, bank, and Jim Deal have in deciding whether they can reach any basic agreement and then, also figure out, what about the redemptioners.
And if a deal is struck, what are the fundamental business risks to that? The risk of a sequential failure, akin to Nedegaard's? How do you from the bank, city, or Deal position bargain, with the current market as it is, and with uncertainty of where it's headed short and mid-term?
My answer - the city can sit tight, and will always have tax cash flow to rely upon. The city has wishes, and no single person calling the shots, as Deal does for himself and some one person does who is CEO at the bank.
The Lone Ranger, he always wrapped things up in under a half hour with time to leave behind a silver bullet. PiPress said the deal makers have cut another month's slack time, for deal making.
Any bets that will be enough? I bet it will not.
Bottom line, part 2: In the real world, White Knights can go Splat too, if not careful and lucky. Usually the splat can be limited to being aced out on the deal, but if you have 26 acres already in tow, you want to call shots more heartily. And if you're not aced out, the risk is you either make a silk purse of it, or you are stuck with an expensive largely unmarketable sow's ear. The fun has only started in this spectator sport. Wouldn't it be more fun with a seat at the table?
Those guys should sell admission tickets.
White knights can go Splat too.