25 May United Development Funding IV Defaults on Loan and Enters into Forbearance Agreement; Investor Distributions Suspended
United Development Funding IV (“UDF IV”) a real estate investment trust based in Texas and sponsored by United Development Funding, disclosed in a Securities and Exchange Commission (“SEC”) reporting that it has defaulted on a loan with a lender and has entered into a forbearance agreement with that lender.
In the SEC filing, UDF IV states that the lender will forbear exercising default-related rights until August 4, 2016, but can terminate its forbearance period if other events of default occur or other conditions are not met.
According to UDF IV’s filing, interest will accrue at a rate of one-month LIBOR plus 11.5%, but UDF IV will only pay interest at the rate of one-month LIBOR plus 9.0%. Interest accruing on the difference between those two interest rates will be due and payable on January 5, 2017.
According to the filing, UDF IV has agreed to “provide certain financial reporting” to the lender and has suspended distributions to its shareholders during the forbearance period. UDF IV also agreed not to originate new mortgage loans, incur additional debt, grant or substitute collateral to any other lender, or dispose of assets without first obtaining the lender’s consent. UDF IV still owes $28.5 million on the original $35 million loan.
Over 150 UDF investors, including many UDF IV investors, have reached out to the Peiffer Wolf lawyers. The firm has already filed a case on behalf of UDF IV investors and is preparing additional proceedings against certain broker-dealer firms that recommended UDF products to their customers. The firm takes most cases of this type on a contingency-fee basis and advances case costs, and only gets paid for their fees and costs out of money they recover for their clients.
Investors who have invested in UDF IV may contact attorneys Jason Kane or James Booker toll-free at 504-523-2434, by email at jpe[email protected], or through the contact form on this website to learn more about the investigation and to discuss their potential recovery options.