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.