With the crash of the financial market, the effectiveness of “bankruptcy remote” provisions has been tested and examined. In the recent case of In re General Growth Properties, the court allowed a bankruptcy remote special purpose entity to voluntarily file for relief under Chapter 11 of the Bankruptcy Code along with its related corporate entities, despite the fact that bankruptcy remote provisions are designed to avoid precisely this result. This Note analyzes the General Growth decision and explores its potential future implications for the special purpose entity as a securitization tool. While General Growth casts doubt on the viability of special purpose entities, a careful examination of the facts and circumstances surrounding the opinion sheds light on how bankruptcy remote provisions can remain effective by following proper procedural precautions.
Samantha J. Rothman,
Lessons From General Growth Properties: The Future Of The Special Purpose Entity,
17 Fordham J. Corp. & Fin. L. 227
Available at: http://ir.lawnet.fordham.edu/jcfl/vol17/iss1/6