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Mall operator seeks Chapter 11 umbrella
Source: Agencies |
April 17, 2009, Friday
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GENERAL Growth Properties Inc, the second-largest mall operator in the United States, filed for Chapter 11 bankruptcy protection yesterday after it failed to persuade most of its debt holders to give it more time to refinance billions of dollars in debt racked up during the housing boom.
The move by the Chicago-based real estate investment trust had been widely anticipated since the fall, when the company warned it might have to seek bankruptcy protection if it didn't get lenders to rework its debt terms. Efforts to negotiate with its unsecured and secured creditors ultimately fell short late last month.
"While we have worked tirelessly in the past several months to address our maturing debts, the collapse of the credit markets has made it impossible for us to refinance maturing debt outside of Chapter 11," Chief Executive Adam Metz said.
Chapter 11 protection allows a company to hold off creditors and operate as normal while it develops a financial reorganization plan.
The company had about US$29.6 billion in assets and more than US$27 billion in liabilities by December 31, according to documents filed with the United States Bankruptcy Court in the Southern District of New York.
The company noted that some subsidiaries, including its third party management business and joint ventures, were not part of the bankruptcy petition.
General Growth said it intends to reorganize with the aim of cutting its corporate debt and extending the terms of its mortgage maturities. It also said it will continue to run all its shopping centers during the bankruptcy process.
The firm said it got a financing pledge from Pershing Square Capital Management LP of US$375 million that it would use to operate during the bankruptcy process.
The move by the Chicago-based real estate investment trust had been widely anticipated since the fall, when the company warned it might have to seek bankruptcy protection if it didn't get lenders to rework its debt terms. Efforts to negotiate with its unsecured and secured creditors ultimately fell short late last month.
"While we have worked tirelessly in the past several months to address our maturing debts, the collapse of the credit markets has made it impossible for us to refinance maturing debt outside of Chapter 11," Chief Executive Adam Metz said.
Chapter 11 protection allows a company to hold off creditors and operate as normal while it develops a financial reorganization plan.
The company had about US$29.6 billion in assets and more than US$27 billion in liabilities by December 31, according to documents filed with the United States Bankruptcy Court in the Southern District of New York.
The company noted that some subsidiaries, including its third party management business and joint ventures, were not part of the bankruptcy petition.
General Growth said it intends to reorganize with the aim of cutting its corporate debt and extending the terms of its mortgage maturities. It also said it will continue to run all its shopping centers during the bankruptcy process.
The firm said it got a financing pledge from Pershing Square Capital Management LP of US$375 million that it would use to operate during the bankruptcy process.
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