Opinion ID: 2334962
Heading Depth: 2
Heading Rank: 1

Heading: The Goal of Replacing Expensive Debt

Text: In January 2001, Insignia brokered the purchase of the Property, acting on behalf of 1899 LLC. [3] Throughout 2001 and 2002, the Developers successfully renovated the Property into an upscale office building and secured tenants. However, the purchase and renovations left significant expensive debt which the Developers sought to replace through refinancing or recapitalization. In the fall of 2002, the Developers asked Insignia to assist them in this effort. According to Insignia, the Developers explicitly stated that they did not want to sell the Property because they hoped to continue earning income and fees from it and to avoid paying capital gains tax. Turning to the task, Insignia began gathering market and project information to present in an Offering Memorandum that would be used to attract potential investors or lenders. Insignia completed an initial draft of the Offering Memorandum near the end of 2002. In essence, this draft was an informal compilation of the nuts and bolts, including the financial analysis and the sale and lease comps, that outlined the financial picture for the property. Sometime in December 2002 or January 2003 Insignia paused in its work while the Developers negotiated a lease with Wilmer, Cutler & Pickering. Around January 2003, Insignia resumed work on the Offering Memorandum. At this point, a complete revision of the initial draft was necessary and Insignia went to work revising, updating, and changing entire sections. Specifically, the sponsorship and financial sections were completely redone and a large portion of the executive summary was changed. Meanwhile, Insignia continued to run[ ] multiple financial scenarios for the 1899 group, Mr. Rector specifically, to show them possible . . . financing scenarios. This work was performed from January to April 2003. Although it is unclear when Insignia officially completed the Offering Memorandum, it did e-mail Rector a nearly final version on March 3, 2003. The various versions of the Offering Memorandum, prepared by Insignia and approved by the Developers, expressly contemplated recapitalization or refinancing, not a sale of the Property.