(BN) Weil Gotshal’s Miller Says Real Estate Bankruptcies May Grow

By Linda Sandler and Tom Keene Dec. 23 (Bloomberg) -- Harvey Miller, lead bankruptcy lawyer for Lehman Brothers Holdings Inc., says real estate bankruptcies may rise as lenders find they can no longer delay taking losses on their loans. Miller, 76, a partner of Weil Gotshal & Manges LLP of New York, told Bloomberg Radio today that financial institutions are holding “huge amounts of real estate... [more]

By Linda Sandler and Tom Keene Dec. 23 (Bloomberg) -- Harvey Miller, lead bankruptcy lawyer for Lehman Brothers Holdings Inc., says real estate bankruptcies may rise as lenders find they can no longer delay taking losses on their loans. Miller, 76, a partner of Weil Gotshal & Manges LLP of New York, told Bloomberg Radio today that financial institutions are holding “huge amounts of real estate debt” while the owners of properties are breaching loan covenants. In the past four months, entities heading for bankruptcy have been given extensions by lenders who have been reluctant to write down their loans, he said. “Financial institutions delay taking enforcement actions and pray,” Miller said. “The question is, will regulators say, ‘Get more realistic. You have to take your losses.” Foundering deals, such as Tishman Speyer Properties LP and BlackRock Realty LP’s $5.4 billion purchase of New York’s Stuyvesant Town and Peter Cooper Village apartments, were predicated on the owners’ ability to keep raising rents, he said. “They were all optimistic.” “A default is expected” on the Tishman complex, according to Fitch Ratings, which has estimated the property’s value at $1.8 billion. Weil Gotshal was paid $127.1 million for acting as the defunct Lehman investment bank’s lead bankruptcy law firm from September 2008 through Nov. 30, Lehman said in its latest monthly financial report. Lehman filed the biggest U.S. bankruptcy in September 2008 with assets of $639 billion. Creditors include UBS AG, the New York Giants and Abu Dhabi Investment Authority as well as individuals who hold Lehman bonds. The case is In re Lehman Brothers Holdings Inc., 08-13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan). For Related News and Information: Lehman bankruptcy stories: LEHMQ US TCNI BCY BN Top stories: TOP Today’s top legal news: TLAW Menu of Bloomberg legal resources: BLAW Top financial news: TOP FIN [less]