Bankruptcy court approves General Growth plan

AP News
Posted: Dec 16, 2009 1:59 PM

Mall operator General Growth Properties Inc. said a bankruptcy court has approved its plan to restructure $10.25 billion in debt related to 103 properties as part of its effort to emerge from Chapter 11 bankruptcy protection.

General Growth, which is based in Chicago, filed the largest U.S. real estate bankruptcy case in history in April.

Under the reorganization plan, the approval of which was announced Tuesday, 194 debtors owning 85 regional shopping centers, 15 office properties and three community centers will emerge from bankruptcy "as soon as practible."

Lenders will restructure the properties' 87 secured mortgage loans, worth about $10.25 billion, in part by extending maturity dates, in exchange for full payment of all undisputed claims of creditors.

A plan for another 26 debtors with 10 properties and $1.7 billion in debt will be up for approval after certain conditions are satisfied.

"Confirmation of these plans of reorganization is a monumental step towards completion of General Growth Properties' overall corporate restructuring," said Thomas H. Nolan, Jr., the company's chief operating officer, in a statement.

The plans create "the foundation for the long term capital structure for General Growth Properties and the basis for emerging our remaining debtors from bankruptcy," he said.

The No. 2 U.S. mall operator, which operates the Ala Moana Center in Honolulu and the Harborplace & The Gallery in Baltimore, expanded aggressively during the real estate boom, amassing $27 billion in debt. As the real estate market imploded and financing dried up, General Growth was unable to refinance its short-term loans.

When General Growth's reorganization plan was filed earlier this month in the U.S. Bankruptcy Court of the Southern District of New York, it was expected to restructure the somewhat smaller amount of $9.7 billion in loans.