As residential and commercial real-estate markets falter, developers are increasingly turning to bankruptcy to stave off foreclosure on their troubled properties.
In the past, developers often filed for bankruptcy for the entire company, tying up all properties owned by their companies.
Changes to tax law and the U.S. Bankruptcy Code in the past decade enable developers to deal with their troubled properties selectively and prevent other properties they own from being affected.
They can file for what is known as a single-asset real-estate bankruptcy.
A property owner or developer sets up separate ownership entities for each project or property it owns, allowing a company to file for bankruptcy on one asset without bringing other assets into the fray.
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