Matthew B. Greene Finance Law Blog on Lawyers.com

The international banking regulatory crisis that began in June 2006 caused increasing paralysis of lending institutions worldwide, creating months of delays in what were previously simple and routine movements of depositor capital through banks.

In response to the deepening crisis, throughout March, April and May of 2007, the Wall Street based law firm STILAS International Law Services, P.A., with a strong presence in London, developed new legal strategies for short term asset based loan closings, in cooperation with a Swiss mortgage lending institution.  The new variations of established financial products were developed by a team of lawyers and compliance officers led by Matthew Greene, a prominent economic security expert.

These proprietary methods, applying Swiss investment banking strategies in new ways, were developed into a unique financial product capable of generating short term “bridge loans” for acquisitions and working capital.  While the loans must be asset based, starting with some tangible asset that would traditionally be used as collateral, the structure results in immediate release of the asset upon closing, leaving it free and clear under ownership of the borrower, or third party contributor of the asset.

This experimental program was intended to meet the needs of international project financing clients who needed short-term loans to obtain or maintain legal rights for their projects, including real estate option purchases and acquisitions, or first-stage operating capital.

In June 2007, STILAS began a series of “test transactions” for the short-term bridge loans with a European partner bank, which insisted on using the bank’s own clients as the first borrowers.  Servicing the bank’s VIP clients first was a prerequisite condition to later making the loans available to all clients of STILAS.  All of the transactions were successfully closed.

STILAS structured and procured asset-based bridge loans, in a batch, against 5 residential properties, and prepared the legal mechanisms and documents for the loan closing, which resulted in $2.0 Million USD project capital for a Netherlands residential development company for expansion of a residential complex, obtained from a Dutch lending bank at 5.0% annual interest with LTV 100% of property value.

In July 2007, STILAS successfully closed another “test transaction” for the short-term bridge loans with a European partner bank for the bank’s own borrower.  For a Netherlands commercial real estate developer for renovation of an office building, STILAS structured and procured an asset-based project loan against one commercial property, resulting in $5.5 Million USD from a German bank at 5.5% interest rate with LTV 100% of property value. 

Closing times for all 6 of the test transactions totaling $7.5 Million were very quick and efficient, consisting of approximately 30 days of preparation followed by 30 days of closing process.

These successful closings, following only 4 months after a landmark $100 Million USD collateral loan closing, demonstrated that STILAS is a leader and developer of solutions in the otherwise failing banking industry.  It also proved that new legal methods can be used by banks worldwide to provide bridge loans that would otherwise not be available. 

STILAS is negotiating with banks throughout the EU to use the successful “test transaction” model to fund its own clients.  While banks have given it highly favorable consideration, further closings have been delayed by a developing credit crisis, liquidity crisis, and deepening regulatory crisis that continues changing the rules, which bank compliance departments and legal departments have been unable to keep up with.

(Case results depend on many factors unique to each case, including facts of a case and decisions of independent third parties.  No firm can guarantee a positive result in any particular case.)