Prudential Ins. Co. of Am. v. SW Boston Hotel
Venture, LLC (In re SW Boston Hotel Venture, LLC), 748 F.3d.
393 (1st Cir. 2014) –
A senior mortgagee battled the debtor and a junior mortgagee
over its entitlement to post-petition interest: If and when did it
become oversecured and thus entitled to interest? Was it entitled
to interest at the default rate? Should the interest be
compounded?
The senior lender (Prudential) agreed to make a construction
loan of up to $192.2 million to finance a mixed-use
development, including hotel, condo units, parking garage,
restaurant, spa, and bar. After the project opened, it obtained
fewer condo commitments than required and did not have sufficient
funds to complete the restaurant, spa, and bar. When Prudential
declined to provide further financing, the City of Boston made a
$10.5 million loan secured by a junior lien on most of
Prudential's collateral and a first lien on $4 million
cash provided by an affiliate of the debtor.
