As many of the readers of our blog are aware, we’ve developed a practice representing taxi medallion owners who own “underwater” taxi medallions. An underwater taxi medallion is a medallion valued at less than the bank loan for the medallion. This blog post is about a successful workout which we negotiated for the owner of an underwater taxi medallion.
Negotiations commenced, but unfortunately the medallion bank was unreasonable in their demand with respect to a settlement and the taxi needed to be repaired or replaced. So, the strategy that we agreed upon was to voluntary surrender the medallion to the Taxi and Limousine Commission (TLC) and the meter and the taxi radio and other equipment were returned to their vendor.
The bank was then able to obtain the medallion from the TLC. The voluntary return of the taxi medallion to the TLC and the client’s asset protection planning were key to settling the action. Ultimately, when the “dust settled”, the bank obtained possession of the medallion (its collateral for the loan), the client kept his house, the State court litigation was discontinued and the client no longer had to worry or maintain an asset (the medallion) that had little value.