Judge dismisses lenders’ motion to keep General Growth subsidiaries out of bankruptcy

General Growth lenders lose bid in bankruptcy case

CHICAGO — Shopping mall operator General Growth Properties Inc. said Tuesday night that a bankruptcy judge has denied a motion by a group of lenders to keep a handful of its subsidiaries out of bankruptcy.

The lenders, led by ING Clarion Capital Loan Services, had argued that some of the company’s shopping centers, including the Tucson Mall in Arizona and the Stonestown Mall in San Francisco, were financially stable and did not need to seek Chapter 11 protection.

The creditors claimed General Growth had “swept” the properties into bankruptcy to benefit from their slightly better financial condition.

“We are pleased with the court’s decision and we look forward to moving ahead with the restructuring of the company,” said Adam Metz, CEO of General Growth Properties, in a statement.

General Growth, the second largest shopping mall owner in the U.S., expanded aggressively at the height of the real estate boom. In 2004, it acquired Rouse Co., gaining such retail gems as Faneuil Hall in Boston and Harborplace waterfront marketplace in Baltimore. In April, General Growth filed for bankruptcy protection in the largest U.S. real estate bankruptcy case in history. At the time, it had $27 billion in debt.

General Growth owns and manages more than 200 U.S. malls, including Glendale Galleria in Southern California and the South Street Seaport in Manhattan. The company included about 166 properties in the bankruptcy filing.