Consolidation of SPEs in Bankruptcy after General Growth: Is Bankruptcy Remote Status Achievable?

    By Gregory Alan Cross, Gregory W Ladner, Joseph Philip Forte and Nancy R Little

    Consolidation of SPEs in Bankruptcy after General Growth: Is Bankruptcy Remote Status Achievable?

    Consolidation of SPEs in Bankruptcy after General Growth: Is Bankruptcy Remote Status Achievable?

    By Gregory Alan Cross, Gregory W Ladner, Joseph Philip Forte and Nancy R Little

    On May 14, 2009, the United States Bankruptcy Court for the Southern District of New York issued an opinion allowing a parent company, General Growth Properties, Inc., in bankruptcy to use the cash from its subsidiaries owning over 160 malls in the parent's bankruptcy, despite the existence in the subsidiaries' organizational ...
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    On May 14, 2009, the United States Bankruptcy Court for the Southern District of New York issued an opinion allowing a parent company, General Growth Properties, Inc., in bankruptcy to use the cash from its subsidiaries owning over 160 malls in the parent's bankruptcy, despite the existence in the subsidiaries' organizational and loan documents of separateness and special purpose entity provisions customary in loans securing commercial mortgage-backed securities (CMBS). This decision raises important questions:
    • What effect does this decision have on the concepts of separateness and isolation of assets in loans?
    • Is the decision limited to the facts of this case or does it have negative implications for CMBS and other loans?
    • Is this decision out of the mainstream of bankruptcy law?
    • What effect does this decision have on non-consolidation opinions and other opinions rendered in the CMBS context?
    • Should lenders' attorneys representing other lenders modify their loan documents to try to avoid a similar result?
    • Should organizational documents of special purpose entity borrowers be modified to avoid certain matters that occurred in this case?
    Our panel includes attorneys experienced with CMBS loans, bankruptcy and opinions rendered in the CMBS context. Moderator: Nancy R. Little, McGuireWoods LLP, Richmond, VA Speakers:Joseph Philip Forte, Alston & Bird LLP, New York, NYGregory A. Cross, Venable LLP, Baltimore, MDGregory W. Ladner, Richards, Layton & Finger, P.A., Wilmington, DE

    Product Details

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    Section of Real Property, Trust and Estate Law

    Product Code

    5430499MP3

    Publication Date

    6/1/2009 12:00:00 AM

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