Tuesday, April 14, 2009

Bondholders Suing GGP

The latest development in the financial tsunami that has engulfed General Growth Properties is that a group of bondholders have instructed their trustee to sue the developer for defaulting on the payment of $395 million of debt that was due on March 16th.

Does this mean a bankruptcy filing is imminent?

According to the Wall Street Journal this “pushes General Growth closer to a bankruptcy filing but doesn’t mean that one is imminent. A trial spurred by the bondholders’ lawsuit likely would take months to play out. Meanwhile, General Growth previously pledged to work with its unsecured lenders to craft an out-of-court restructuring of its balance sheet by the end of June. If General Growth meets that commitment, the trial might not be needed.”

Complicating GGP’s efforts to restructure their debt, much of which was incurred when they purchased The Rouse Company five years ago, is the current constriction in the capital markets for commercial real estate lending.

2 comments:

Anonymous said...

the 'current constriction' article goes to an article from a year ago.

The Gonzo Journalist said...

I don't think General Growth Properties will actually declare bankruptcy. Sure the company is struggling financially but if they declare chapter 11, the banks will gain ownership of GGP's properties.

I don't think the banks want to shoulder these properties anymore than GGP wants to declare bankruptcy.

But what's the alternative, government ownership investment like AIG?