Business NEWS

General Growth Properties Seeks Chapter 11 Bankruptcy

By Amarendra Bhushan for CEOWORLD Magazine Updated:April 16, 2009

GENERAL GROWTH PROPERTIES, INC. (“GGP”), the second-largest U.S. shopping-mall owner, today announced that it is voluntarily seeking relief to reduce and restructure its debts under chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York.

In addition, approximately 158 regional shopping centers owned by GGP and certain other GGP subsidiaries (collectively with GGP, the “Company”) have also filed for protection. The Company intends to work with its constituencies to emerge from bankruptcy as quickly as possible while executing on a plan of reorganization that preserves the Company’s integrated, national business operations.

All day-to-day operations and business of all of the Company’s shopping centers and other properties will continue as usual.

The decision to pursue reorganization under chapter 11 came after extensive efforts to refinance or extend maturing debt outside of chapter 11. Over many months, the Company has endeavored to negotiate with its unsecured and secured creditors to obtain the time needed to develop a long-term solution to the credit crisis facing the Company. Unable to reach an out-of-court consensus, the Company reluctantly concluded that restructuring under the protection of the bankruptcy court was necessary.

During the chapter 11 cases, the Company will continue to explore strategic alternatives and search the markets for available sources of capital. The Company intends to pursue a plan of reorganization that extends mortgage maturities and reduces its corporate debt and overall leverage. This will establish a sustainable, long-term capital structure for the Company.

The Company also announced that it has received a commitment for a debtor-in-possession financing facility of approximately $375 million from Pershing Square Capital Management, L.P., as agent. When approved by the bankruptcy court, the new facility will provide a source of funds to the Company during the chapter 11 process. The Company has requested, and expects to receive, additional approvals to give the Company the authority to make payments to ensure that the Company’s shopping centers and other properties continue to operate uninterrupted in the ordinary course of business, including paying employee compensation, certain critical service providers, insurance and other claims. The Company intends to pay all providers of goods and services delivered post-petition.

“Our core business remains sound and is performing well with stable cash flows. We believe that chapter 11 is the best process for restructuring maturing mortgage loans, reducing the Company’s corporate debt, and establishing a sustainable, long-term capital structure for the Company,” said Adam Metz, Chief Executive Officer of the Company. “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,” he said.

Sphere: Related Content

Like this article! ‹ Fiat CEO Sergio Marchionne, without Union ok on job cuts No Fiat deal Lehman Brothers Law Firm Weil Gotshal Seeks $55 Million in Fees ›
Share this Post: Get It Delivered To Your Inbox