General Growth Properties, one of the largest mall operators in the United States, filed for bankruptcy in mid April. The company has been in negotiations for months with its creditors for better terms on paying down its $25 billion debt. When those failed, it decided to reorganize through bankruptcy.
The company is based in Chicago and filed for bankruptcy in Manhattan. It indicated that its malls will continue to operate and has secured funding for the process. Its reorganization efforts will likely focus on selling off some of its properties. As the second largest operator of malls in the nation, General Growth has been troubled by the recession in the country and has had trouble filling its malls with stores. According to research firm Reis, the vacancy rate for malls at the end of 2008 was 7.1 percent, up from 5.8 percent and the highest level in nearly a decade.
Much of the debt is in the form of short term mortgages that the company used to expand, but which are coming due. The company has tried to work with holders of $2.25 million in bonds, but bondholders couldn’t hold out any longer and asked for the payments that were due.
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