Client Wins Back $20 Million Building in Complex Financing Transaction
A hospital operator approached Holland & Knight with a serious business issue. Some years ago, the client had built an imaging center and physician offices on hospital grounds, and financed the building by means of an off-balance sheet synthetic lease/conduit transaction using a company that specialized in such financing transactions.
The financing mechanism, which was both complicated and complex, required the financing company to have nominal title in the building with the client responsible for all costs and payments, and the client would receive the net rent while the building was being financed and built. The financing company would convey the building to the client once the transaction was due to be collapsed.
When the client wanted to bring the transaction to an end and take over the building, the financing company refused to comply with the agreement, insisting that under certain fine print, it had the right to hold on to the building (an asset believed at that time to be worth more than $20 million) or receive payment of several million dollars from the client.
Notwithstanding the complexity of the agreements and the financing company's conviction, Holland & Knight advised the client to stand firm and to sue for specific performance. The client went with the recommendation and the firm filed suit. Following an unsuccessful mediation, the matter went to trial.
The court ruled in favor of our client and ordered that the property be conveyed to the client. The court also awarded our client its attorneys' fees.