Breach of Forbearance Agreement

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7^th Circuit Court of Appeals

Case Name: Romspen Mortgage Limited Partnership, v. BGC Holdings LLC – Arlington Place One, et al.,

Case No.: 20-3017

Officials: RIPPLE, ROVNER, and SCUDDER, Circuit Judges.

Focus: Breach of Forbearance Agreement

This case brings to us a contract dispute over a piece of commercial real property in Arlington Heights, Illinois. After BGC Holdings, LLC, et al., (“BGC”) defaulted on a loan secured by Romspen Mortgage Limited Partnership (“Romspen”), the parties negotiated an agreement to avoid foreclosure of the property (the “Arlington Property”) and to salvage the loan. As a result of these negotiations, they entered into a Forbearance and Loan Extension Agreement (the “Forbearance Agreement” or the “Agreement”). By the terms of this document, Romspen agreed to hold off on the judicial sale of the property; for its part, BGC agreed to make a $1.6 million payment on the loan. While the parties were negotiating the Forbearance Agreement, BGC learned that Romspen had filed a lien against another property (the “1907 Property”) in which one or more of the defendants had an ownership interest. This news created a problem for BGC because it had planned to refinance the 1907 Property so that it could make the payment on the Arlington property as required by the Forbearance Agreement. When BGC failed to provide proof of a refinancing plan for the Arlington Property, Romspen refused to remove the lien on the 1907 Property, and eventually BGC foreclosed on the Arlington Property.

After the foreclosure sale of the Arlington Property, BGC filed a motion for leave to file a counterclaim alleging that Romspen had breached the Forbearance Agreement. In response, Romspen filed a motion for an order confirming the judicial sale of the property. The district court denied BGC’s motion to file a counterclaim. It ruled that Romspen had not breached the Forbearance Agreement because it made “commercially reasonable efforts” to remove the lien on the 1907 Property. The district court also granted Romspen’s motion for confirmation and issued a separate order confirming the sale of the Arlington property and ordering the eviction of BGC.

BGC now appeals. For the reasons set forth in this opinion, we conclude that Romspen did not breach the Forbearance Agreement and that the district court’s decision to confirm the sale of the Arlington property was proper. We therefore affirm the district court’s judgment.

Affirmed
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Derek A Hawkins is Corporate Counsel, at Salesforce.