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NEW YORK CITY-GMAC Commercial Mortgage Corp. has filed an action in New York State Court against the Port Authority of New York and New Jersey and the World Trade Center LLCs to compel them to comply with contractual obligations during the rebuilding process of the World Trade Center site. GMAC wants to protect the interests of its certificateholders in the $563 million loan that GMAC made to the World Trade Center LLCs. The Port Authority owns the site, while Larry Silverstein of Silverstein Properties is the leaseholder. Silverstein and the Port Authority are confident that the issue can be resolved.

GMAC states, “The Port Authority and the WTC LLCs have steadfastly failed to comply with those obligations, despite GMAC’s repeated requests. In order to ensure the protection of the certificateholders’ security interest, GMACCM is compelled to take this action.”

The complaint continues. “As reflected in the various public statements of the Port Authority and the World Trade Center LLCs during the past several months, those organizations have committed to the restoration of the World Trade Center, commencing with the planned construction next summer of the Freedom Tower designed by Studio Daniel Libeskind. As a result, the Port Authority and the World Trade Center LLCs each owe various contractual obligations to the certificateholders that will protect the certificateholders’ security interest.”

Central among these obligations is the requirement for the Port Authority and the World Trade Center LLCs to obtain GMAC’s consent to the rebuilding plan and to deposit sufficient funds from the insurance proceeds to ensure the payment of all amounts due under the loan during the rebuilding process.

Both Silverstein and the Port Authority believe this situation can be resolved.

“It is unfortunate and unnecessary that this dispute ended up in court,” Silverstein says in a statement. “We have been working with the Port Authority and GMAC for months to try to avoid this litigation. It is incumbent upon everyone involved to sit down and try to solve GMAC’s issues in a way that will enable us to proceed without delay in rebuilding the World Trade Center.”

The Port Authority echoed similar statements. “The Port Authority has consistently maintained that the maximum amount of insurance money available for the World Trade Center site be devoted to planning and rebuilding efforts, according to the Port Authority. “We have had positive, productive discussions with all of the parties involved to ensure that the money is spent in that manner. We are confident that we can come to a quick resolution, eliminating the need for GMAC’s costly, unnecessary litigation.”

This suit can just be added to the pile of legal actions associated with the rebuilding of Ground Zero. Just last month, oral arguments were heard before the United States Court of Appeals for the Second Circuit on Silverstein Properties’ appeal from Judge John S. Martin Jr.’s ruling that a jury would have to decide whether the deliberate crashes of two planes into the Twin Towers constitute one or two “occurrences” for purposes of the $3.55 billion “per occurrence” insurance policy on portions of the complex. No decision has been released. Silverstein Properties had filed suit against Industrial Risk Insurers, the Connecticut-based insurance unit of General Electric, to compel IRI to fully satisfy its obligation to pay for the reconstruction of 7 World Trade Center. That suit was filed as a claim in a suit that is already pending in the United States District Court for the Southern District of New York brought by a former tenant of 7 World Trade Center against IRI.

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