Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

The Bankruptcy StrategistLJN NewslettersNewsSections

General Growth Properties

By ALM Staff | Law Journal Newsletters |

To the surprise of many, when General Growth Properties Inc. (“GGP”) commenced a Chapter 11 proceeding in April 2009, it caused 166 solvent bankruptcy remote entities that were current on all their indebtedness (the “General Growth SPEs”) that each owned a single mall property to also file Chapter 11 petitions. In August, in a highly anticipated test of the legal structures underpinning securitized financing, the United States Bankruptcy Court for the Southern District of New York denied a motion to dismiss bankruptcy cases filed by General Growth SPEs. In re: General Growth Properties, Inc., 2009 WL 2448423, No. 09-11977 (Bankr. S.D.N.Y. Aug. 11, 2009). The GGP case is significant as it is the first decision to analyze comprehensively a bankruptcy remote structure in many years, and it seems to undercut many market assumptions that these entities were largely insulated from bankruptcy risk.

In the past 20 years or so, real estate finance has evolved from mortgage loans made by a bank or institution that held the loans until maturity and maintained its relationship with the borrowers, to non recourse loans utilizing so called “bankruptcy remote” structures, which loans were then securitized and sold to investors as commercial mortgage backed securities (“CMBS”). The economics of CMBS loans were favorable to borrowers because, among other things, the bankruptcy remote structure was implemented to isolate the assets from other parts of a borrower's business, ensuring that cash flows would be dedicated solely to the specific CMBS debt. Perhaps more importantly, CMBS loans were designed to minimize the risk that a borrower would utilize bankruptcy to delay a lender from foreclosing a defaulted mortgage, or from taking advantage of the cramdown provisions of the Bankruptcy Code.

This premium content is locked for Entertainment Law & Finance subscribers only

  • Stay current on the latest information, rulings, regulations, and trends
  • Includes practical, must-have information on copyrights, royalties, AI, and more
  • Tap into expert guidance from top entertainment lawyers and experts

For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473

Read These Next
Bankruptcy Sales: Finding a Diamond In the Rough Image

There is no efficient market for the sale of bankruptcy assets. Inefficient markets yield a transactional drag, potentially dampening the ability of debtors and trustees to maximize value for creditors. This article identifies ways in which investors may more easily discover bankruptcy asset sales.

Judge Rules Shaquille O'Neal Will Face Securities Lawsuit for Promotion, Sale of NFTs Image

A federal district court in Miami, FL, has ruled that former National Basketball Association star Shaquille O'Neal will have to face a lawsuit over his promotion of unregistered securities in the form of cryptocurrency tokens and that he was a "seller" of these unregistered securities.

Why So Many Great Lawyers Stink at Business Development and What Law Firms Are Doing About It Image

Why is it that those who are best skilled at advocating for others are ill-equipped at advocating for their own skills and what to do about it?

Blockchain Domains: New Developments for Brand Owners Image

Blockchain domain names offer decentralized alternatives to traditional DNS-based domain names, promising enhanced security, privacy and censorship resistance. However, these benefits come with significant challenges, particularly for brand owners seeking to protect their trademarks in these new digital spaces.

Coverage Issues Stemming from Dry Cleaner Contamination Suits Image

In recent years, there has been a growing number of dry cleaners claiming to be "organic," "green," or "eco-friendly." While that may be true with respect to some, many dry cleaners continue to use a cleaning method involving the use of a solvent called perchloroethylene, commonly known as perc. And, there seems to be an increasing number of lawsuits stemming from environmental problems associated with historic dry cleaning operations utilizing this chemical.