General Growth: From No. 2 to Chapter 11

General Growth Properties Inc. (GGP - Analyst Report) filed for bankruptcy protection on Thursday after its seven-month long endeavor to restructure a $27 billion debt load failed to bear fruit.

A significant part of the Chicago-based mall giant’s debt can be traced back to its $11.3 billion acquisition of Rouse Co. in 2004. Commercial-property values have steadily shrunk since then to reach a rock bottom in the wake of a global recession. General Growth’s Chapter 11 filing is the biggest real-estate bankruptcy in U.S. history.

"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.

Several creditors revealed their intention to sue the company for immediate payment on past-due bonds last Monday, finally hastening the bankruptcy filing after months of speculation and payment-deadline extensions. General Growth has shed 81% of its value in the last six months. The stock had touched an all-time high of $67 in March 2007.

General Growth said it would pursue a reorganization plan in order to exit from bankruptcy protection as a “leaner company”. However, after sorting out the case with a complex lineup of creditors, shareholders of the second-largest U.S. mall owner might be left with nothing.