April 16, 2009 5:29 PM

The Bankruptcy Files: General Growth, Noble, and AbitibiBowater

Posted by Brian Baxter

Some big boys found themselves in bankruptcy today, so let's get right to it:

GENERAL GROWTH

After months of negotiations with lenders to extend payment deadlines, General Growth Properties, the second-largest owner of shopping malls in the U.S., filed for bankruptcy in New York.

The Chapter 11 filing by the Chicago-based REIT, which owns and operates more than 200 shopping malls in 44 states, is the largest real estate bankruptcy filing in U.S. history.

Several Am Law 100 bankruptcy lawyers have a piece of the work. Marcia Goldstein, chair of the business, finance, and restructuring practice at Weil, Gotshal & Manges, is serving as bankruptcy counsel to General Growth. Partner Gary Holtzer is working with Goldstein on the matter.

Also advising General Growth is Kirkland & Ellis's James "Jamie" Sprayregen. The bankruptcy bigwig has a long-standing relationship with the REIT. General Growth turned to Weil and Kirkland for restructuring counsel in January after sacking Sidley Austin.

Neither Weil nor Kirkland has yet filed billing information with the bankruptcy court.

Falling commercial real estate prices, retail sales, and the credit crunch have hit General Growth hard. The company has stated publicly that it intends to emerge from Chapter 11 intact.

The New York Times reports that General Growth owns some of the best known U.S. retail establishments: Honolulu's Ala Moana Center, Chicago's Water Tower Place, New York's South Street Seaport, and the Grand Canal Shoppes at The Venetian in Las Vegas.

General Growth remains viable in bankruptcy thanks to $375 million in debtor-in-possession financing provided by Pershing Square Capital Management. The New York-based hedge fund already owns about 25 percent of General Growth.

Jones Day M&A chair Robert Profusek, real estate partner Michael Haas, restructuring and reorganization head Paul Leake, Chicago business restructuring head Brad Erens, finance partner Vanessa Spiro, and M&A partner Peter Izanec advised Pershing on the financing.

Bankruptcy court records show several law firms appearing on a list of General Growth creditors. New York's Kramer Levin Naftalis & Frankel, which represented General Growth on its redevelopment of South Street Seaport and several other iconic Manhattan properties, is owed $559,626.

Hawaiian firms Schlack Ito Lockwood Piper & Elkind and Watanabe Ing are owed $155,977 and $129,316, respectively. (Schlack Ito does real estate work; Watanabe Ing government and public affairs adviser Dana Gusman is a former General Growth employee.)

Los Angeles real estate and litigation firm Brown Winfield Canzoneri Abram, which folded in February when 17 partners left for McKenna Long & Aldridge, is owed $102,230.

The Wall Street Journal reported earlier this week that Wilmer Cutler Pickering Hale and Dorr was retained by a group of General Growth bondholders who want to sue the mall owner because they haven't been paid their share of $395 million in bonds that were due on March 16.

NOBLE INTERNATIONAL

Like the rest of the ailing U.S. auto industry, Troy, Mich.-based auto parts supplier Noble International has been hurting in recent months. A day after CEO Thomas Saeli resigned, Noble became the latest auto supplier to succumb to the economic crisis, filing for bankruptcy in Detroit.

Noble had been relying on financing U.S. automakers--not exactly the most reliable these days--to keep its North American operations functional. The company has secured DIP financing and plans to sell off assets to stay in business.

Salvatore Barbatano, the cochair of Foley & Lardner's bankruptcy and business reorganization practice, is serving as Chapter 11 counsel to Noble along with senior counsel David Dragich.

The firm has not yet filed billing information with the bankruptcy court.

ABITIBIBOWATER

If there's one business hurting even more than the auto industry or real estate, it's newspapers. On Thursday the much-publicized troubles in print publishing finally caught up with AbitibiBowater, the largest producer of newsprint in North America.

Bloomberg reports that after the company's U.S. lenders refused to accept a proposed debt restructuring plan, AbitibiBowater filed for Chapter 11 in Delaware. The Montreal-based company also stated that some of its Canadian subsidiaries will seek bankruptcy protection under Canada's Companies' Creditors Arrangement Act. (The Financial Post has a good story on some notable differences between U.S. and Canadian bankruptcy laws.)

Paul, Weiss, Rifkind, Wharton & Garrison has been retained as AbitibiBowater's bankruptcy counsel with Troutman Sanders serving as conflicts counsel.

Both firms served as lead M&A counsel to Abitibi-Consolidated and South Carolina-based Bowater, respectively, on their $8 billion merger of equals in January 2007. The deal made the combined AbitibiBowater entity North America's third-largest paper and forest products company. (Incidentally, Troutman announced on Thursday that the firm would start a Canada practice.)

But the decline of the newspaper industry has meant reduced demand for paper. What is AbitibiBowater doing with the vast tracts of forestland it owns? In recent months the company began selling timber assets to repay its debts, most recently tapping Canadian firm Ogilvy Renault for such a sale in February.

Delaware's Young Conaway Stargatt & Taylor has been tapped as local bankruptcy counsel to the paper producer; Stikeman Elliott is serving as Canadian counsel under the CCAA.

Billing information from the law firms is not yet available.

WE'RE ON TWITTER
Follow our coverage of bankruptcy--and The Work--on Twitter at www.twitter.com/amlawdaily.

Make a comment

Comments (0)
Save & Share: Facebook | Del.ic.ious | | Email |

Reprints & Permissions

The comments to this entry are closed.