Judge OKs General Growth financing

General Growth Properties Inc. received approval from the bankruptcy judge on Oct. 8 for financing to accompany approval of the Chapter 11 plan scheduled for an Oct. 21 confirmation hearing.

The U.S. Trustee objected to allowing UBS Securities LLC to serve as an underwriter and lender in part of the so-called exit financing. The U.S. Trustee contended UBS didn't meet the requirement of being “disinterested” because it was already serving as one of General Growth's two financial advisers.

The objection of the U.S. Trustee was resolved in a chambers conference that was closed to the public. UBS said in response to the objection of the U.S. Trustee that “no party with an economic stake in the outcome of these Chapter 11 cases opposes UBS's participation as an underwriter.” UBS also said that its prior “efforts have undeniably contributed to the Debtor's success.”

The General Growth subsidiaries owning the properties already confirmed Chapter 11 plans paying their creditors in full. Creditors of General Growth's top-tier companies are to receive full payment under the parents' Chapter 11 plan up for confirmation on Oct. 21. The plan preserves some of the stock for existing shareholders. The plan is financed in part with an $8.55 billion debt and equity commitment from a group led by Brookfield Asset Management Inc.

General Growth, the second-largest mall owner in the U.S. with 180 properties in 43 states, began the largest real-estate reorganization in history by filing under Chapter 11 in April 2009. The books of Chicago-based General Growth had assets of $29.6 billion and total liabilities of $27.3 billion as of Dec. 31, 2008.

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