A CLOSER LOOK AT THE LAW
Special attention must be provided to an EB-5 transaction that does not involve fraud and that otherwise encounters monetary issues that could jeopardize both the financial and immigration viability of the EB-5 investment .
This does not happen very often , but the industry needs to be aware of the implications related to a socalled “ troubled project .” or a “ troubled business ”. These issues should be anticipated both in the offering documents , including the limited partnership / operating agreement , as well as the loan documents and the loan administration process . There are two significant categories to be addressed , including immigration and financial issues .
IMMIGRATION ISSUES
From an immigration standpoint , the first priority is to create jobs and then maintain the at-risk component of the investment . If a project is in midstream of development that has not been completed or if the operating business does not create the budgeted revenues to create additional jobs , then this could pose a serious problem since without completion of construction or the execution of the business plan there may be a serious risk that the projected number of jobs will not create the number of jobs required to obtain I829 approval .
Other potential problems include situations where the actual funding of the project has not begun due to legal issues such as the termination of a lease for a project site , the inability to obtain senior financing , internal developer partner disputes that delay the start of construction , or other issues that prevent the funding of the loan or the contribution of equity .
FINANCIAL ISSUES
The second part of the equation is the financial integrity of the investment and the ability of investors to receive a return of their capital . This would include the factors stated above as well as the following considerations : Background information on the developer is discovered that brings into play the ability of the developer to separately fund and / or complete the project .
Project-related changes that may not be material from an immigration standpoint but will otherwise negatively impact the financial viability of the project , such as the
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