Judge allows claim against General Growth

General Growth Properties Inc., the mall owner that filed the biggest real-estate bankruptcy in U.S. history, may face a claim by Kern River Gas Transmission Co., a federal judge ruled at a hearing in Manhattan today.

U.S. Bankruptcy Judge Allan Gropper ruled today that the operator of a natural gas pipeline in Nevada and Utah can bring a claim against a unit of General Growth, lifting the so-called "automatic stay" that usually protects bankrupt companies from legal actions.

“Under these circumstances, the movant makes a strong showing that counterclaims should be permitted,” Gropper said.

John Dushinske, a vice president at Kern River, said in a court filing that in 2007, the company determined it needed to increase the operating pressure on a pipeline that crossed land owned by Howard Hughes Properties Inc., a General Growth property in Nevada. It asked the Federal Energy Regulatory Commission to issue a finding that an increase in pressure was necessary for the public.

The “Howard Hughes Debtors” said they opposed an increase in pressure. On April 13, days before the bankruptcy filing, they brought a lawsuit in Nevada seeking a declaration to stop Kern River from increasing the pressure of the pipeline.

Kern River said it seeks “equitable relief and condemnation” in order to protect its property interests.

The case is In re General Growth Properties Inc., 09-11977, U.S. Bankruptcy Court, Southern District of New York.