Decision Time Legalese

What a week.. if ever I needed a reminder why I want to set-up my own business and get out of the sector, working for one of the supposed 'elite' banks (aka 'slave driving bastards'), this is it.

I am on course to notch up a 70 hours week, which is just unhealthy - never mind it also equating to having no life.

I don't have much time to comment on anything, unless anybody cares more than I do about the centre pieces design. Wedding preparation intensity is non-stop: women have an amazing capacity to focus at such moments I have discovered. Work.. wedding talk.. sleep.. wedding talk.. work.. wedding talk.. sleep..

Without enough time to get back to researching other investment opportunities, I am back onto GGP for now, and there has still not been much movement on the key decision in the Court case, although it should be very soon. Judge Gropper has clearly had a busy week ploughing through the mountain of GGP motions submitted.

Most are minor, procedural changes proposed by GGP in light of it entering Chapter 11, so are unimportant to the outcome. On Wednesday we saw MetLife's motion to dimiss several of it's SPE's from the Chapter 11 filing go before the Court. The day before, GGP filed an objection to limit the testimony of MetLife's experts relating to refinancing, which they submitted here.

GGP questioned the expertise of the witnesses that MetLife sought to call for evidence, citing their lack of being on the MetLife Real Estate Investments Committee, which is "the decision-making body with knowledge of this topic." They also cite their 'lack of preparation' in reviewing the key issues in the weeks leading up to the hearing, such that they could not be deemed suitable to provide advice.

General Growth also sought to draw on the Court's expressed desire to fast-track GGP's case as a reason to dismiss them:

"Given the expedited nature of this hearing and this Court’s expressed desire to resolve the various motions to dismiss rather than hold yet another round of hearings, MetLife’s failure to provide witnesses with knowledge about this area of inquiry cannot be excused, and should not be without the typical consequences i.e., MetLife should be barred from presenting any evidence regarding what MetLife would or might have done with regard to extending or refinancing any of the loans at issue in MetLife’s Motion to Dismiss. Put differently, MetLife should be held to what its corporate representatives testified to -- and nothing more."

Well I am not convinced, but it is worth a try. Yesterday saw this response from MetLife, and I recommend reading the introduction if nothing else, because the language is strong by legal standards and quite a laugh. MetLife's attourney's, Greenberg Traurig LLP, seem beside themselves with anger at GGP's attempt to have their evidence dismissed before it is even heard.

The motion to limit MetLife's testimony representatives is described as "nothing more than a desperate attempt by the GGP Debtors to exclude evidence that demonstrates that their entire premise for the filing of their chapter 11 cases is simply untrue." MetLife go on to forcefully suggest that GGP's case almost entirely rests around its argument "that refinancing was not available to them in the face of upcoming maturities."

In reality that is not the case - just have a browse through my previous analysis for examples of the range of other arguments that GGP have put forwards. MetLife again state that refinancing was not an issue with the malls in question here "and they [GGP] know it". They go on to state:

"The testimony that the GGP Debtors seek to exclude shows that MetLife would have been, and remains, interested in discussing refinancings or extensions of the loans to the MetLife Borrowers."

'Retrospectively interested' seems more accurate to me. MetLife point out that they have refinanced "similar loans of similar properties within the relevant time period" but I suspect that is unlikely to stand up to inspection, as they were not for REIT's in technical default. It is also highly unlikely that MetLife refinanced those with equivalent maturities so far into the future, given the tax exposure factor that is cited in the Wall Street Journal as a flaw preventing many early refinancing negotiations to open.

MetLife suggest that the only reason GGP have submitted the request to exclude these testimonies is because of their 'devastating' nature to GGP's case. Indeed "the GGP Debtors are desperately seeking any pretext to prevent the Court from considering this important evidence." Yet if the other refinancing is not truly comparable as outlined above, then that is not valid at all.

More likely GGP were busy rocking the boat and seeking to exploit a weakness in the case by having witnesses removed. Either way, it is not yet known whether this motion was upheld or not, but I feel that it is unlikely to sway the ultimate decision on this issue, despite MetLife's claims.

Even if MetLife were allowed to provide witnesses who claim refinancing was a possibility, most of their evidence is conjecture and therefore debatable. This also does not counter the case that large numbers of SPE's did refuse to even open negotiations, which combine with factors such as GGP's claim of a need to remain integrated and proactively seek a means of negotiating with all lenders.

To my mind, if the motion to dismiss the witness exclusion was overturned then the strength of GGP's original case is unchanged - but if it was upheld then it undermines MetLife's case, which is probably at the root of their vehement response.

The hearings on Friday are largely not part of this more important issue, but expect a decision soon - I am still expecting a favourable outcome for GGP.