Big US mall operator files for bankruptcy

General Growth Properties, the second largest US shopping mall operator, filed Thursday for bankruptcy, saying "broken credit markets" made it impossible to otherwise restructure its debt.

The bankruptcy of the operator of some 200 shopping centers comes amid a deep slump in residential real estate that some fear is spreading to commercial sector amid a severe recession.

The group listed debts of some 27 billion dollars in its filing -- which according to some reports were accumulated during a frenzies acquisition spree of recent years -- and assets of 29 billion dollars.

Over the past few months, the group was listed by Standard and Poor's as likely to be in default, and its stock price had plunged 97 percent over the past year.

The bankruptcy highlights the downward spiral of the US economy, with a housing meltdown that crimped consumer spending and has hammered the retail sector.

"As would be expected with any large commercial real estate enterprise, General Growth is highly leveraged and was probably able to get mortgages with ease at the height of the real estate boom," said analyst Douglas McIntyre at 24/7 Wall Street.

"The company has 27 billion dollars in debt and, with real estate prices depressed, it may be impossible to raise even close to that amount of money through asset sales."

The Chicago-based company said day-to-day operations of its shopping centers and other properties will continue as usual as it seeks to reorganize under chapter 11 of the bankruptcy code filed in federal court in New York.

"The company intends to work with its constituencies to emerge from bankruptcy as quickly as possible while executing on a plan of reorganization that preserves the company's integrated, national business operations," a company statement said.

"The decision to pursue reorganization under chapter 11 came after extensive efforts to refinance or extend maturing debt outside of chapter 11.

"Over many months, the company has endeavored to negotiate with its unsecured and secured creditors to obtain the time needed to develop a long-term solution to the credit crisis facing the company."

General Growth said it has received a commitment for financing in bankruptcy of some 375 million dollars from Pershing Square Capital Management to allow it to operate during the bankruptcy process.

"Our core business remains sound and is performing well with stable cash flows," said chief executive Adam Metz.

"We believe that chapter 11 is the best process for restructuring maturing mortgage loans, reducing the company's corporate debt, and establishing a sustainable, long-term capital structure for the company.

"While we have worked tirelessly in the past several months to address our maturing debts, the collapse of the credit markets has made it impossible for us to refinance maturing debt outside of chapter 11."