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CHICAGO-General Growth Properties Inc. received bankruptcy court approval for a $400 million debtor-in-possession financing loan being offered by Farallon Capital Management LLC.

The retail-focused company will be able to use the cash to fund its current operations. According to a company release, “The DIP Financing will be used to refinance certain pre-petition secured indebtedness and provide additional liquidity to the Debtors during the Chapter 11 process.”

GGP executives expect the financing to close today. While there was some opposition to GGP’s court petition, experts in the industry think this is a positive move. The Commercial Mortgage Services Association stands behind the courts decision, although with some hesitation. “CMSA believes the bankruptcy court ruling recognizes the integrity of the special purpose entity structure,” says CMSA president Christopher Hoeffel, ” While CMSA and its members consider this to be a generally positive ruling, it still doesn’t completely abate the industry’s concerns about putting Special Purpose Entities into bankruptcy.”

At the beginning of the month, CMSA sent an amicus brief to the court, to illustrate its the concern that the GGP proposal would disregard the key financing structure the industry has leaned on for twenty years. Still the group stated that an adverse ruling could potentially damage the CMBS market.

GGP filed for Chapter 11 bankruptcy protection in the middle of April. In total 169 regional shopping centers have been included in the filing, the majority of the assets not included are ones owned in a joint venture.

There will be a court hearing on May 27 to discuss whether the Special Purpose Entities did a ‘bad faith filing.’ Hoeffel says CMSA is anxious to hear what the court has to say about this issue.

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