Ninth Circuit Issues a Bankruptcy Opinion Favorable to Lenders to SPEs

February 07, 2012
In its recent decision in Meruelo Maddux Properties, Inc., the Court of Appeals for the Ninth Circuit held that an entity that meets the definition of a “single real estate” debtor under the Bankruptcy Code may not escape the consequences of such designation simply because it is a subsidiary of a group of companies with integrated and intertwined relationships among them. This update examines the decision, which could establish powerful rights to lenders to such entities and significantly enhance the rights of creditors of real estate owning single purpose entities.