Glenbrook owner files Chapter 11 bankruptcy

Apr 16, 2009 (The News-Sentinel - McClatchy-Tribune Information Services via COMTEX) -- GGP | Quote | Chart | News | PowerRating -- The owner of Glenbrook Square filed for bankruptcy early today -- a long-expected move that could at least temporarily deny millions of dollars in tax revenues to local governments already short on cash.

Chicago-based General Growth Properties Inc., the nation's second-largest mall operator, filed for Chapter 11 bankruptcy protection after it failed to persuade a majority of its debt holders to give it more time to refinance billions of dollars in debt.

Because Chapter 11 of the U.S. bankruptcy code generally allows companies to remain in business during restructuring, General Growth officials assured the public that day-to-day operations at Glenbrook and its other properties would not be affected by today's filing. But the mall at 4201 Coldwater Road is one of the county's largest taxpayers, so its bankruptcy could have a big impact on other property owners.

As of last year, the assessed value of General Growth's majority holding in Glenbrook Square was about $199 million, translating into an annual tax bill of $5.6 million. While operating under Chapter 11, a company can suspend payment of taxes without penalty, and the county would file a claim with the bankruptcy court that could allow it to recover all or part of the taxes when the company emerges from bankruptcy.

But that could result in a temporary but "huge" loss of revenue for local governments, said County Treasurer Sue Orth. And even an end to bankruptcy doesn't guarantee the county will be able to collect all it's owed. When the Dana Corp. emerged from bankruptcy in 2007, for example, the company owed the county $2.09 million on its local plant -- but paid $1.75 million.

And Glenbrook's property tax bill has been a source of litigation for years. General Growth bought the mall for $219 million in 2003, a year after the county assessed its taxable value at $114 million. But General Growth argued in court that the mall should be taxed at a value of about $62 million.

"I didn't think this would happen. They tried so hard to avoid going into bankruptcy," County Commissioner Linda Bloom said today. "This is going to be especially hard on Washington Township and the Fort Wayne Community Schools."

The court battle continues, and bankruptcy's impact is unclear.

General Growth's filing today had been anticipated since last fall, when the company warned it might have to seek bankruptcy protection if it didn't get lenders to rework its debt terms.

"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," Chief Executive Adam Metz said in a statement.

The company had about $29.6 billion in assets and more than $27 billion in liabilities as of Dec. 31.

It has a stake in more than 200 malls across 44 states.

The Associated Press contributed to this story.

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