Lim & Yeoh has extensive, hands-on experience in advising and structuring rescue and revival of abandoned real estate schemes. Such rescues typically involve navigating the competing interests of multiple stakeholders, including chargee/mortgagee banks, developers, frustrated homebuyers, end-financiers, and a whole host of creditors such as contractors, suppliers and service providers. Such situations present complex legal challenge and require a high level of combined legal expertise across several sub-specialties of conveyancing, debt financing, bridging finance, end-financing, construction, and litigation. It takes a team with combined expertise of all of the above, and it is difficult to avail a single solicitor whom is familiar with all these fields all at once.
At Lim & Yeoh, we bring together a multidisciplinary team capable of delivering precisely this breadth of expertise. Our founding partner, Dato’ Bruce Lim, in particular, has had experience in successfully acquiring, rescuing, and rehabilitating several abandoned real estate projects, some under the auspices of Bank Negara, the country’s central bank. Notable projects include: –
- Taman Pelangi, Rawang, Selangor (300 units)
- Villaria Petaling Jaya, Selangor (580+ units)
- Taman Kobena, Cheras, Kuala Lumpur (200+ units)
Case Studies
Villaria, PJ
This is a revival scheme involving some 300+ units of apartments within 2 blocks of buildings, x units of bazaar, and y units of shops, all abandoned at different stages of construction. Owing to the effluxion of some 9 years before a serious rescue effort was mobilized, there were major costs escalations, mounting interests and mortgage payments which had been paid in vain over the years by purchasers, a change in the state government and policies, land acquisitions for highways, which has compounded the complications in the rescue effort. The new State Government also became intimately involved, and intervened in the Scheme. Rehabilitation efforts are continuing.
The Firm is tasked with formulating the overall Revival Scheme / strategies, compromise and spearheading the negotiations with all stakeholders and the State Government.Tthe Firm structured 2 packages catering for both continuing (Option A) and non-continuing purchasers (Option B). Option A purchasers were required to top-up the purchase price, and make several compromises on waiver of late delivery LAD, as well some amendments to the building specifications.They would sign a tripartite Novation cum Supplementary Agreement, with the rights of the Old Developer (vide the liquidator) being novated to the new white knight developer. Option B purchasers were required to sign a Deed of Mutual Termination cum Supplementary Agreement.
The Firm then organised 2 rounds of mass-meetings together with the liquidator, white-knight developer, with all the purchasers, with attendance MOH and local governmental officials, garnering in excess of 75% acceptance of the Revival Scheme, vide the signing of election forms.
With the absolute majority exceeding 75%, the Firm applied on behalf of the Liquidator for court sanction, and succesully obtained the court’s endorsement of the appointment of the white knight as the new developer, in substitution to the liquidator; sanction of the detail terms and commercial aspects of the Revival Scheme, by-passing the need for a s.176 scheme of compromise under the Companies Act, and paving the way for the white knight developer to obtain the Developer’s License, and the relevant exemptions for advertising permits from the Ministry of Housing.
The Firm then organised the mass-meetings with the some 20+ banks having exposure to the abandoned housing project, to obtain concensus, standardise, and to co-ordinate the revised security & documentation flow, and release of balance loans to the white knight developer under the Revival Scheme.
After having obtained the EF Banks’ endorsement to the Scheme, the Firm arranged for the mass-signing of supplmentary agreements with the purchasers in mid-2014. Physical construction on the Site then re-commenced around Q3-2014.
The Firm engineered and co-ordinated a relatively smooth continued-loan release by the old End-Financiers to the White Knight, without the need for fresh loan documentation being signed.
The White Knight developer has since completed the construction of the Project, obtaining CF on 31.12.2015.