Silverstein May Use Insurance Money to Pay Bondholders

June 7, 2002

Reports from several sources indicate that Silverstein Properties may use part of the proceeds from an imminent insurance settlement to buy out bondholders on the mortgage of 7 World Trade Center.

The 47 story office building, which was home to numerous businesses, among them the NY Office of the Securities Exchange Commission, collapsed several hours after the twin towers, and is not part of the lawsuit between Silverstein and a group of insurers headed by Swiss Re (See IJ Website June 4).

Industrial Risk Insurers is set to pay around $861 million to Silverstein for the lost building, which the company has owned since the 1980′s, long before it acquired the master lease on the WTC. The debt on the property is around $383 million, much of it securitized as mortgage bonds.

The bondholders have been waiting since Sept. 11 to see what their position is. Both Moody’s investors Service and Fitch Ratings put the bonds on their “watchlists.”

If Silverstein Properties decides to pay off the bondholders at face value, which it has no yet formally announced it will do, it would decrease the funds available for the company to begin rebuilding, but would avoid a fight with the bondholders, who have argued that they purchased securities backed by an existing property, and did not intend to provide construction financing.

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  • April 26, 2010 at 9:21 am
    Joseph p bell says:
    WHY HAVEN'T YOU INVESTIGATED LOWER MANHATTAN (re) DEVELOPMENT CORP. :? SET UP BY GWBUSH FOR THE BENEFIT OF ROLAND BETTS (PARTNERS IN TEXAS RANGERS FRAUD )OF TAXPAYERS ; BUILDI... read more
  • May 17, 2007 at 12:19 pm
    Don Nobinger says:
    Silverstein admitted that building 7 was demolished on purpose. It takes days and maybe even weeks to set up a Controlled Demolition on a 47 story building. How can a Controll... read more
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