A distressed-debt fund is seizing control of one of the largest malls in America after a series of moves that wiped out some creditors and even left holders of bonds once rated AAA nursing steep losses.
The trade was set in motion after Black Diamond Capital Management bought more than 70% of the top-ranking slice in a commercial mortgage-backed security tied to the struggling Palisades Center shopping mall in West Nyack, New York. The firm then used its position to acquire the sole mortgage backing the CMBS at a discount, triggering the bond’s liquidation, according to court filings and deal documents reviewed by Bloomberg.