Real Estate Bankruptcies: The Impact of In re General Growth

Strategies for Real Estate Companies, Lenders and Investors Dealing With Special Purpose Entities

Recording of a 90-minute CLE webinar with Q&A

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Conducted on Wednesday, November 4, 2009

Recorded event now available

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Course Materials

This seminar will discuss the bankruptcy litigation and rulings to date in General Growth Properties, the impact of the case for special purpose entities and the commercial mortgage based securities market, and best practices for lenders and debtors in real estate bankruptcy reorganizations.


The General Growth Properties (GGP) bankruptcy case may be a precedent-setting bankruptcy case for the next wave of commercial real estate bankruptcies. At issue are bankruptcy filings by GGP’s special purpose entities (SPEs), many of which were solvent and not in danger of default.

The status of SPEs was tested in several key rulings. The court allowed GGP to access the cash collateral of its SPEs and denied property lenders' motions to dismiss the SPEs. The court also addressed fiduciary duties of directors and officers of solvent SPEs to its lenders and equity holders.

As the GGP case progresses, the court is expected to address a number of key legal issues in real estate financing. Issues such as substantive consolidation and classification and treatment of secured, mezzanine and unsecured debt are all sure to be tested.

Listen as our authoritative panel of bankruptcy attorneys discusses the precedent-setting developments in the GGC case thus far and analyzes the impact of these rulings on real estate financing.



  1. Overview of General Growth Properties bankruptcy rulings
    1. Cash collateral and adequate protection for secured lenders
    2. DIP financing
    3. Authority of SPEs to file bankruptcy
    4. Bad faith bankruptcy filings
    5. Fiduciary duties of SPE officers and directors
  2. Unique Issues in Real Estate Bankruptcies
    1. Single asset real estate
    2. “Bad boy” guaranties
    3. Substantive consolidation
    4. Cram-down risks
    5. Second lien (mezzanine) loans
  3. Restructuring strategies for REITs, SPEs and their secured lenders
    1. Strategies for changes in CMBS and other financing structures
    2. In-court strategies to address issues arising out of the current financial crisis
    3. Up-to-date developments in other recent cases and restructurings


The panel will review these and other key questions:

  • How has the court in the General Growth Properties case addressed substantive consolidation of the special purpose entities?
  • Has the status of special purpose entities as "bankruptcy remote" been jeopardized by the rulings in the General Growth Properties case?
  • What lessons can be learned from General Growth Properties on structuring special purpose entities to avoid having to file bankruptcy under such circumstances?


McGowen, Lorraine
Lorraine S. McGowen

Orrick Herrington & Sutcliffe

Ms. McGowen has practiced in the areas of creditors' rights and bankruptcy for over 20 years, focusing on...  |  Read More

Michael E. Foreman
Michael E. Foreman

Of Counsel
Haynes & Boone

Mr. Foreman has more than 20 years of financial restructuring and bankruptcy experience, representing secured and...  |  Read More

Harold Bordwin
Harold Bordwin

Managing Director and Group Head
KPMG Corporate Finance

He serves as a Managing Director and Co-Group Head of the Real Estate Services Team focusing on real estate...  |  Read More

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