General Growth seeks to deny lenders' interest claim

General Growth Properties Inc., the mall owner that reorganized in bankruptcy, sought a court order denying a claim from lenders led by Eurohypo AG for $85.6 million in additional interest.

The lenders aren't entitled to the interest payment because they didn't accelerate the 2006 loan before General Growth's bankruptcy in 2009, the company said in a filing yesterday with the U.S. Bankruptcy Court in New York.

“Having made the economic choice to forbear from accelerating the loan, the 2006 lenders cannot now undo that choice,” General Growth said.

Chicago-based General Growth, the second-largest mall owner in the U.S., exited from bankruptcy last year after winning court approval for a restructuring plan that spun off part of the company.

“We're reviewing the filing and will respond accordingly by the deadline,” said Brett Miller, a lawyer for Eurohypo. “The agent strongly believes we are entitled to the default rate of interest.”

As part of the bankruptcy plan, General Growth said it paid the lenders under the 2006 loan outstanding principal of $2.58 billion, $143.3 million in interest, plus other payments.

The case is In re General Growth Properties Inc., 09-11977, U.S. Bankruptcy Court, Southern District of New York (Manhattan).