Lenders that financed eight malls operated by General Growth Properties Inc. want the shopping centers dropped from the Chicago company's Chapter 11 case, claiming the malls' bankruptcies will "wreak havoc" on the commercial real estate lending market.

ING Group NV's ING Clarion Capital, the special servicer representing the lenders, said in a filing Monday with the U.S. Bankruptcy Court in Manhattan that if General Growth is allowed to include the properties in its Chapter 11 case, it "likely will wreak havoc with the structured finance markets" and will chill the flow of much-needed cash into the commercial mortgage-backed securities market.

General Growth, which filed for bankruptcy protection last month, structured the malls' owners as special-purpose entities, each owning a single piece of real estate. That structure, the lenders said, should put the properties outside the reach of General Growth's restructuring case.

Absent intervention from the bankruptcy court, ING Clarion said, "the fundamental premises underlying this market, and structured finance markets generally, will be demonstrated to have been invalid," and "investors as well as more traditional real estate lenders will no longer be able to rely on the bankruptcy remoteness of their special-purpose entity."

ING Clarion said the malls — in California, Arizona and four other states — are financially stable, generate positive cash flow and can service their debts.

The special servicer said General Growth may have opted to put the properties into bankruptcy to pressure the lenders to grant loan extensions on some of the properties.

ING Clarion said there "is no legitimate reason" for any of the malls to be under bankruptcy protection, and it wants Judge Allan L. Gropper to dismiss the cases. A hearing on the issue is slated for May 27.

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