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A New York judge granted a group of junior lenders who helped finance construction of American Dream in East Rutherford the right to collect at least $389 million of defaulted debt.

In February, Sol-MM III LLC, a California-based administrative agent working on behalf of firms linked to Western Asset and Nonghyup Bank of South Korea, filed a lawsuit in New York State Supreme Court alleging a breach of contract by Ameream Mezz I LLC, an affiliate that developed the mall, and sought to recoup more than $389 million in loans that came as part of a larger $1.7 billion construction financing package.

In an April 10 decision, Judge Andrew Borrok granted the lenders’ request for summary judgment, ruling that the borrower must repay the loan, plus interest. The judge noted that Ameream Mezz I did not contest the case and Sol-MM II LLC’s motion was unopposed.

American Dream spokesperson Jessica Griffin issued a statement to NJBIZ, saying, “The referenced lawsuit does not involve American Dream nor is there any demand made against American Dream. The case and claim are filed against a single purpose entity (SPE), which has no ownership of American Dream.”

The ruling comes about a month after East Rutherford sued the mall owners, claiming they failed to make about $7.5 million in property tax-like payments owed to the borough. Filed in New Jersey Superior Court in Bergen County, the municipality said Triple Five Group initially agreed to make payments in lieu of taxes on property surrounding American Dream in exchange for the rights to develop a minor league baseball stadium, offices and a hotel.

Under the terms of those real estate PILOT agreements, payments to East Rutherford were supposed to begin once the mall opened in October 2019; however, the borough claims American Dream hasn’t held up its end of the bargain.

The complaint also names the New Jersey Sports and Exposition Authority (NJSEA) – which owns the property where American Dream is located and serves as guarantor if the mall fails to make its PILOT payments – as a defendant.

After years of delays, the $5 billion, 3.5 million-square-foot Meadowlands megamall finally opened in fall 2019, only to temporarily close a few months later due to the onset of the COVID-19 pandemic.

In 2021, American Dream generated about $173 million in revenue, but its expenses totaled more than $232 million. And it recorded $305 million in sales — far below the $2 billion Triple Five initially projected for the property’s first year of operations. In 2022, the mall – which has steadily added new stores, attractions and restaurants – performed a bit better, reporting $422 million in gross sales, up 38.4% from the prior year.