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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.
General Growth Properties, Inc. is a publicly traded real estate investment trust and general partner (with a 96% equity stake) of General Growth, a limited partnership that manages more than 200 shopping centers, many of which are owned by separate General Growth SPE subsidiaries and separately financed. Such management was done on a nationwide, integrated basis with General Growth providing centralized leasing, marketing, management, cash management, property maintenance, and construction management services as well as the arranging of financing.
Yachts, Jets, Horses & Hooch: Specialized Commercial Leasing Models
Defining commercial real estate asset class is essentially a property explaining how it identifies — not necessarily what its original intention was or what others think it ought to be. This article discusses, from a general issue-spot and contextual analysis perspective, how lawyers ought to think about specialized leasing formats and the regulatory backdrops that may inform what the documentation needs to contain for compliance purposes.
Hyperlinked Documents: The Latest e-Discovery Challenge
As courts and discovery experts debate whether hyperlinked content should be treated the same as traditional attachments, legal practitioners are grappling with the technical and legal complexities of collecting, analyzing and reviewing these documents in real-world cases.
Identifying Your Practice's Differentiator
How to Convey Your Merits In a Way That Earns Trust, Clients and Distinctions Just as no two individuals have the exact same face, no two lawyers practice in their respective fields or serve clients in the exact same way. Think of this as a "Unique Value Proposition." Internal consideration about what you uniquely bring to your clients, colleagues, firm and industry can provide untold benefits for your law practice.
Risks and Ad Fraud Protection In Digital Advertising
The ever-evolving digital marketing landscape, coupled with the industry-wide adoption of programmatic advertising, poses a significant threat to the effectiveness and integrity of digital advertising campaigns. This article explores various risks to digital advertising from pixel stuffing and ad stacking to domain spoofing and bots. It will also explore what should be done to ensure ad fraud protection and improve effectiveness.
Turning Business Development Plans Into Reality
This article offers practical insights and best practices to navigate the path from roadmap to rainmaking, ensuring your business development efforts are not just sporadic bursts of activity, but an integrated part of your daily success.