Debt time bomb clicking, again, for General Growth Properties

Time has run out on $900 million loan

For General Growth Propertiese (GGP), developer of record for the Elk Grove Promenade mall, this old saying might be applicable - 'he who fights and runs away will live to fight another day.'

The only problem for GGP is that another day seems to have come.

GGP has $900 million in loans secured by two of GGP's crown jewels - The Fashion Show and Palazzo properties in Las Vegas, that have already been extended and are now overdue. A spokesperson for GGP said the company was in default but the group of lenders have not moved to foreclosed.

If the group of lenders do not re-extend the loans and start foreclosure proceedings, it would likely force GGP to declare Chapter 11 bankruptcy.

GGP has retained the services of the Chicago-based law firm of Sidley Austin who specializes in bankruptcy reorganizations.

If GGP does renegotiate this loan, the crisis for the Chicago-based mall developer is far from over. It has over $4 billion in debt due over the next three years.

It is unclear what a GGP bankruptcy would mean for the Elk Grove Promenade other than further delays in the final completion date of the long-awaited retail center. Given the high commercial vacancy rate and number of small business failures in Elk Grove, the delay could actually give those remaining retailers a bit of breathing room.