Judges allows General Growth to reorganize $500 mil in loans

General Growth Properties Inc., the second-largest U.S. mall owner, won court approval to reorganize $500 million of loans for two shopping centers, adding to its $11.6 billion in property-level debt that has been reorganized.

U.S. Bankruptcy Judge Allan Gropper approved reorganization plans for Stonestown Galleria in San Francisco and Mall of Louisiana in Baton Rouge, Louisiana. Company lawyer Anup Sathy said General Growth is left with six remaining property-level loans worth $2.8 billion which it is preparing to restructure. Property level loans refer to debt that's held by the unit that owns the property, as opposed to the corporate parent.

"I realize this case is hotly contested in some regards but let us not forget the status of these debtors and apparent good fortune of everyone in these case," Gropper said in Manhattan court today, noting the company's successful reorganization of its properties, which began in December.

The company has said it will consider financial backers for its reorganization with Brookfield Asset Management Inc. acting as a stalking-horse bidder. It also had an unsolicited $10 billion bid from Simon Property Group Inc.

Gropper will also consider in today's hearing whether the company can have exclusive control over its bankruptcy for another six months. He said he plans to take testimony from creditors, who have objected to the Brookfield deal.

Today's confirmation marks the fifth installment of project level reorganizations as General Growth exits bankruptcy in stages, Sathy said. Of the $11.6 billion in loans that have won approval to reorganize, $11.3 billion at 210 units of the company have already closed, or exited bankruptcy, Sathy said.

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