GMAC Sues Silverstein, Port Authority over Insurance Proceeds

September 5, 2003

GMAC Commercial Mortgage Co., a financing unit of General Motors Corp., has filed a lawsuit over claims that World Trade Center master leaseholder Silverstein Properties and the site’s owner, the Port Authority of New York and New Jersey, have not retained enough money from insurance payments to guarantee that amounts owed to GMAC will be repaid.

The company lent Silverstein approximately $560 million to finance the acquisition of the lease on the twin towers in July 2001, shortly before their destruction on Sept. 11. It had earlier filed a lawsuit in January 2002 that sought to limit the amounts Silverstein could retain from payments on insurance policies. The parties reached a compromise of the dispute in April 2002.

GMAC’s new complaint alleges that Silverstein and the Port Authority have so far received some $1.9 billion in insurance payments, but have not reserved enough of the money to assure repayment of some $563 million plus interest to the bondholders.

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