General Growth Properties: Reorg Plan Delay Is No Surprise

General Growth Properties Seeks Until 2010 to File Reorg Plan

This was not unexpected as General Growth (GGWPQ.PK) had initially said when it filed it had hope to file a plan "by the end of the year". If you follow bankruptcies, you know that those initial deadlines are rarely met due to the complex nature of the process. But, having the clarity is a good thing. It would be shocking were this extension not granted. The only way I can see it done is if Gropper decides to consolidate the filings and just cram down all debt. In that scenario (unlikely), the reorg plan becomes very simple overnight.

This isn't to say a cram down is not likely or in the best in interest of all parties, it is that there will likely be some dilution and deciding the "who and what" of it will take time...
Dow Jones Reports:

General Growth Properties Inc. (GGWPQ) needs until early next year to complete its plan to exit bankruptcy, saying its operations are too large and too complex to meet an upcoming August deadline.

General Growth, the second-largest mall owner in the country, is asking a judge for a six-month extension to file its plan to exit bankruptcy and repay creditors. The existing deadline is Aug. 14.

If approved, the extension to Feb. 26, 2010, would allow General Growth to maintain exclusive control over the path of its bankruptcy case by preventing creditors and others from filing rival plans with the court.

Chicago-based General Growth filed for bankruptcy April 16 to restructure $27 billion in debt. It said in court papers last week that it has achieved "major and solid accomplishments" during the case but needs more time to negotiate with creditors.

The company has spent much of its time in court fighting with lenders to its malls. Early in the case, lenders unsuccessfully tried to block General Growth's plan to spend the cash generated by its individual malls. The lenders claimed the cash couldn't be swept into a central account to benefit other properties.

More recently, a group of lenders and loan servicers representing lenders moved to force about a dozen of General Growth's malls out of bankruptcy. They
claim there's no reason for the properties to be part of General Growth's Chapter 11 case because they generate positive cash flow and can service their debts.

Judge Allan Gropper, who's overseeing the case in the U.S. Bankruptcy Court in Manhattan, has yet to rule on the dispute.

At a court hearing scheduled for July 28, Gropper will consider General Growth's request for more time to file its bankruptcy plan. In addition to setting a Feb. 26, 2010, deadline, General Growth wants until April 23 to win
creditor support.

Disclosure : Long GGWPQ