Facebook
Fark
Digg
Reddit
StumbleDeveloper’s bankruptcy reorganization may affect area shopping malls, gas pipeline
Friday, July 17, 2009 | 2 a.m.
Sun Archives
- Mail operator remains upbeat (5-29-2009)
- General Growth Properties reports quarterly loss (5-7-2009)
- General Growth files for Chapter 11 protection (4-24-2009)
- General Growth files for bankruptcy; malls likely to stay open (4-15-2009)
- General Growth stock up on news report (3-31-2009)
- General Growth extends forbearance request (3-16-2009)
Sun Coverage
Beyond the Sun
The battle over the undeveloped Summerlin acreage is just one of several Las Vegas Valley aspects of the General Growth Inc. bankruptcy case.
• Another Summerlin-related issue involves a fight over a natural gas pipeline that runs under parts of the master-planned community. Kern River Gas Transmission Co. is asking permission from the Bankruptcy Court to litigate its dispute with the Howard Hughes Corp. over Kern River’s plan to increase the pressure in that distribution line, which carries gas from Wyoming to California.
The Federal Energy Regulatory Commission last month approved Kern River’s request for a systemwide increase in pressure.
Hughes Corp. sued Kern River in April, saying the plan would hurt Summerlin by raising safety concerns. On Wednesday, the bankruptcy court gave Kern River permission to litigate its counterclaim against Hughes. Kern River seeks a court judgment that says boosting the pressure in the pipeline does not violate an easement agreement Kern River reached with Hughes Corp. in 1993.
• General Growth owns local malls — Boulevard, Meadows, Fashion Show, Grand Canal Shoppes at the Venetian, Shoppes at the Palazzo and the unfinished Summerlin Centre — so the case has the potential to affect those properties. The court has ordered General Growth to pay higher interest on a $900 million loan for the Fashion Show and Palazzo malls.
• Metropolitan Life Insurance Co. is asking the court to dismiss several Chapter 11 reorganization cases filed by General Growth subsidiaries that operate Summerlin commercial properties, including the Hughes headquarters office building. MetLife, the lender on the projects, says the properties are profitable and before the bankruptcy filing were current on their debt payments.
MetLife says it lent Hughes $24 million in 2001 and that loan is secured by the properties at West Charleston Boulevard, Covington Cross and Town Center Drive.
“The Chapter 11 cases of the Hughes-Summerlin debtors should be dismissed because they were not filed in good faith. At the time the Hughes-Summerlin debtors’ cases were filed, the Hughes-Summerlin debtors were current on all of their obligations and were not experiencing any immediate or imminent financial problems,” MetLife said in a court filing. “The actual net operating income for the Hughes-Summerlin properties in 2008 was $3.956 million with total debt service of $2.089 million.”
“It is clear that the petitions of the Hughes-Summerlin debtors were not filed with any reorganizational purpose; they were filed solely to obtain leverage and a tactical advantage in any future efforts to extend the (March 2011) maturity of the loan,” MetLife said.
But attorneys for General Growth defended the decision to include in the bankruptcy the Summerlin properties and other projects across the country secured by MetLife loans, saying in court papers: “The evidence establishes that the decision-makers made prudent business judgments. (They) determined that given the crash of the commercial real estate financing market, the subsidiary debtors’ mortgage loans — each with a maturity date in the next two years — had little or no chance of being successfully refinanced.”
Discussion: comment so far…
Comments are moderated by Las Vegas Sun editors. Our goal is not to limit the discussion, but rather to elevate it. Comments should be relevant and contain no abusive language. Comments that are off-topic, vulgar, profane or include personal attacks will be removed. Full comments policy. Additionally, we now display comments from trusted commenters by default. Those wishing to become a trusted commenter need to verify their identity or sign in with Facebook Connect to tie their Facebook account to their Las Vegas Sun account. For more on this change, read our story about how it works and why we did it.
Only trusted comments are displayed on this page. Untrusted comments have expired from this story.
No trusted comments have been posted.
Post a comment
Most Popular
- Viewed
- Discussed
- E-mailed
Everything Under the Sun
Blogs
The Kats Report
Clint Holmes is a big deal at Cabaret Jazz and 'The Carlyle!'; Playboy's furry-ous closing; Elvis is a 'Legend'
Joe Pesci remembers his own honeymoon in Vegas -- meeting the Rat Pack (1 Comment)
Las Vegas Philharmonic says search for new music director to begin 'immediately' (1 Comment)
With Shenandoah project stalled, Wayne Newton hits back legally (7 Comments)
Where does a Playmate play when she turns 21? Vegas! (3 Comments)
Ice Ice Billy
The road to six-toed cats and Mayor Bubba
The Kats Report
David Itkin tells L.V. Philharmonic officials he's on his way out (14 Comments)
- Locally owned and independent since 1950; Winner of the Pulitzer Prize for Public Service, best news website in the nation & DuPont Award for broadcast journalism
Kudos to Steve Green for wading through the General Growth Properties bankruptcy file, to try to figure out how the massive case affects Las Vegas.
Back when the case was filed, no print or television journalist wanted to report the fact that one of the Chapter 11 debtors in the General Growth Properties case was the developer of Summerlin. It's one thing for the developer of Lake Las Vegas to go bankrupt, in terms of Las Vegas' image, i.e. no big deal, but for the developer of Las Vegas' most tony suburb to file bankruptcy, it's a serious reflection on the instability created by critical land in Las Vegas being owned by highly leveraged mega corporations.
Finally, one television station, formerly owned by Howard Hughes, reported that the Summerlin developer had filed bankruptcy. In its sentimental report of how upset Howard Hughes would be, that his name was dragged into bankruptcy court, the television station reported that the management company for the master homeowners association for Summerlin was one of the hundreds of entities General Growth Properties' management put into bankruptcy.
No one in the Las Vegas press has ever confirmed that statement about bankruptcy of the management company was true. That is unfortunate, because home owners association management companies are fiduciaries, who hold several HOA's money in trust, and who must at all times act as trustees applying the best interest of each HOA, and only the HOA, as the sole grounds for decision making. The filing of a Chapter 11 by a homeowners association management company would be, in and of itself, a breach of fiduciary duty to its HOA clients.
There would be absolutely no legitimate reason to put a developer-controlled home owners association management company into a Chapter 11 bankruptcy.
So if the claim by the local television station is true, that the management company for the Summerlin master homeowners association is in Chapter 11 bankruptcy, the Sun and the LVRJ need to be asking "Why?"
Comingling and conversion of HOA funds or assets? A bone headed decision by General Growth Properties non-lawyer executives? A sloppy mistake by idiot junior lawyers at General Growth Properties' bankruptcy law firm, which is not in Nevada?