A New York judge on Monday sided with a group of junior lenders suing the American Dreammega-mall for $389 million.
The lenders alleged a breach of contract and sued the mall in February for defaulted debt — which occurs when a borrower does not make its loan payments. They demanded “no less than” $389 million with interest at the “minimum contractual default" of 13.75%, plus other legal costs.
Bloomberg Law was the first to report on this week’s decision by New York Judge Andrew Borrok. The California-based plaintiff is an administrator representing two firms, Western Asset Management and Nonghyup Bank of South Korea, which provided part of the $1.7 billion in loans that financed the sprawling project's construction.
The lawsuit was filed in New York State Supreme Court on behalf of California-based Sol-MM III LLC against Ameream Mezz I LLC, an affiliate which developed the Meadowlands mega-mall.
"The referenced lawsuit does not involve American Dream nor is there any demand made against American Dream,” said spokesperson Jessica Griffin. “The case and claim are filed against a single purpose entity which has no ownership of American Dream.”
A single purpose entity is a type of limited liability company (LLC) used for a singular purpose, generally to redevelop a property. Real estate developers use single purpose entities to shield themselves from legal liability. In this case, the single purpose entity is Ameream, Griffin said.
American Dream has faced its share of headaches and successes in recent months. It opened the high-end grocery chain H Mart this winter, four years after it was first announced.
In the fall, analysts said the mall was showing signs of a rebound, as retail outlets in general began to emerge from the shadows of the COVID pandemic.
But there have also been repeated signs of trouble. The mall, owned by Canadian developer Triple Five, reported $60 million in losses in 2021 amid the pandemic, and it's embroiled in a dispute over $9 million in payments that neighboring municipalities say they are owed.
East Rutherford is suing the mall, saying they refused to make its contractual payments to the town for parcels of land that have yet to be developed.
