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The General Growth Properties Bankruptcy and the Future of Securitizations
Do the recent rulings in the General Growth Properties bankruptcy spell doom for equipment debt securitizations? Not necessarily so, according to the recent rulings of Southern District of New York Bankruptcy Judge Allan Gropper in the $27 billion General Growth Properties Chapter 11 bankruptcy ' at least with respect to the issue of substantive consolidation. Judge Gropper's denial of motions to dismiss certain solvent special purpose entity (“SPE”) subsidiaries from the General Growth Properties bankruptcy confirms, however, that creditors of a solvent “bankruptcy remote” SPE should not assume that the SPE's “independent” director or manager will refrain from putting the SPE into bankruptcy when its parent also files. In denying the motions to dismiss, Judge Gropper ruled that the managers of the SPEs, including the independent managers, were within their rights and breached no law or duty when they decided to cause the SPEs to file for bankruptcy along with their parents, General Growth Properties, Inc. and General Growth Properties LP (“General Growth”), and nearly 400 of their affiliated companies. He made it clear in his published opinion, however, that permitting the solvent SPEs to remain in bankruptcy does not mean that they will be substantively consolidated with their affiliates.
Judge Gropper's ruling on the motions to dismiss and his prior approval of debtor-in-possession (“DIP”) financing allowing General Growth access to cash collateral generated by subsidiary SPE assets and pledged to the SPEs' lenders has sent shock waves through the debt securitization and structured finance markets. While not necessarily killing off those markets, the General Growth Properties rulings will have a direct effect on the way rating agencies, lenders, underwriters, and other creditors view traditional bankruptcy remote structures in equipment, as well as real property financings, particularly with respect to two of the basic tenets of securitizations and structured debt: 1) the owner of the securitized assets or collateral will remain out of reach of the equitable powers of a bankruptcy court, and 2) such assets will not be used to support the bankruptcy estate of such owner's parent.
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
Beach Boys Songs Written Decades Ago Triggered Current Quarrel With Lawyers
There's current litigation in the ongoing Beach Boys litigation saga. A lawsuit filed in 2019 against Nevada residents Mike Love and his wife Jacquelyne in the U.S. District Court for the District of Nevada that alleges inaccurate payment by the Loves under the retainer agreement and seeks $84.5 million in damages.
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
Transfer Tax Implications on Real Property Leases
The real property transfer tax does not apply to all leases, and understanding the tax rules of the applicable jurisdiction can allow parties to plan ahead to avoid unnecessary tax liability.