A group of junior lenders to the troubled American Dream mall won the right to collect on at least $389 million of defaulted debt after a judge ruled in their favor on Monday.
(Bloomberg) — A group of junior lenders to the troubled American Dream mall won the right to collect on at least $389 million of defaulted debt after a judge ruled in their favor on Monday.
Judge Andrew Borrok granted the lenders’ request for summary judgment against an entity used to finance the $5 billion mall and entertainment complex in New Jersey’s Meadowlands, according to a court order. The lawsuit, filed in New York Supreme Court in February, was brought by an entity that serves as an administrative agent for firms linked to Western Asset and South Korea’s Nonghyup Bank, court documents show. The complaint demanded payment of “no less than” $389.2 million with interest at “the minimum contractual default rate of 13.75%” as well as other costs.
The New Jersey mall, which broke ground in 2004 and ultimately opened in 2019, has struggled under a series of owners and fallen behind on its debt payments amid construction delays, cost overruns and the pandemic shutdown. Last year, it received an extension on some of its debt from lenders led by JPMorgan Chase & Co., part of a deal that stripped the junior lenders of their collateral.
Investors who purchased a slug of $290 million of municipal bonds backed by state grants to finance the project, haven’t received semi-annual interest payments since last August.
American Dream reported about $422 million in gross sales in 2022. That was a 38% increase from 2021, its first full year of operations. A 2017 study had projected that the mall would bring in roughly $2 billion in its first year.
“The case and claim are filed against a single purpose entity, which has no ownership of American Dream,” a representative for American Dream said in a statement.
Public documents show that the entity the judgment was awarded against is an affiliate of the company created to develop and own the American Dream project.
Lawyers for the administrative agent and representatives of Governor Phil Murphy and the state Economic Development Authority didn’t immediately respond to requests for comment.
The case is SOL-MM III LLC v. Ameream Mezz I, LLC New York Supreme Court, New York County.
–With assistance from John Gittelsohn.
(Updates with statement from American Dream and details on the related entity subject to the judgement.)
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