In two recent decisions in the General Growth Properties, Inc., et al. chapter 11 cases, the United States Bankruptcy Court for the Southern District of New York upheld certain loan provisions which provided for an automatic event of default and imposition of a default rate of interest upon the commencement of a bankruptcy case, and held that certain creditors were entitled to receive postpetition interest at the contractual default rate.  General Growth Properties, Inc. and its affiliated debtors own, develop, and operate regional shopping malls across the United States.

In re Provo Gateway, LLC (Bankr. D. Utah) Case no. 11-31259

In re Gelt Financial Corporation (Bankr. E.D. Pa.) Case no. 11-15827

In re East Coast Abatement Co. Inc. (Bankr. E.D. Va.) Case no. 11-73560

In re Summer View Sherman Oaks Apartments, LLC (Bankr. C.D. Cal.) Case no. 11-19800

In re MicroBlade, LLC (Bankr. W.D. Wis.) Case no. 11-14981

Postconfirmation liquidation and litigation trusts have become an important mechanism in a chapter 11 bankruptcy estate’s arsenal, allowing for the resolution of claims and interests without needlessly delaying confirmation in the interim. The specter of postconfirmation litigation may seem unremarkable. Section 1123(b)(3)(B) of the Bankruptcy Code states that a plan may provide for retention or enforcement by the reorganized debtor, the trustee, or a representative of the estate of any claim or interest belonging to the estate.

In re Piedmont Center Investments, LLC (Bankr. E.D. Wis.) Case no. 11-32453

The Bottom Line:

In re Culver Village, LLC (Bankr. C.D. Cal.) Case no. 11-46359