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Mall operator seeks new lease on life

General Growth Properties’ debt plan would remove Faneuil Hall Marketplace from bankruptcy protection

The restructuring plan could hinder merchants’ efforts to buy the lease at Faneuil Hall Marketplace. The restructuring plan could hinder merchants’ efforts to buy the lease at Faneuil Hall Marketplace. (Essdras M. Suarez/ Globe Staff/ File 2009)
By Jenn Abelson
Globe Staff / December 3, 2009

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General Growth Properties Inc. yesterday filed a plan to restructure $9.7 billion in debt with hopes of removing at least 92 malls, including Faneuil Hall Marketplace, from bankruptcy protection by the end of the year.

The Chicago mall operator is trying to negotiate billions of dollars more in debt for various properties, such as the struggling Natick Collection.

The restructuring plan, if approved, could complicate efforts by local merchants to buy the lease at Faneuil Hall Marketplace. After General Growth filed for bankruptcy protection in April, a group of retailers received $25 million in pledges to try to take control of the shopping center and tourist attraction. Now that lenders have agreed to modify loan terms, General Growth is not under pressure to sell off prized assets to quickly come up with cash.

“We are extremely pleased to take this important step of filing the plan of reorganization for these debtors,’’ Thomas H. Nolan, Jr., General Growth’s president and chief operating officer, said in a statement. “We will continue to work with our other secured mortgage lenders and are hopeful that we will reach additional consensual agreements quickly.’’

The reorganization plan is expected to come before a judge for approval Dec. 15. Many of General Growth’s lenders agreed to extend maturity dates of their loans, maintain predefault interest rates, and waive fees. John C. La Liberte, chairman of the litigation department at the Boston law firm Sherrin and Lodgen, said these terms will help provide a framework for lenders who have not made agreements.

Adam Cohen, a lawyer representing the Faneuil Hall Merchants Association, said the shop owners would still be interested in buying the property once General Growth reorganizes.

“At this time, the merchants are hopeful that GGP will emerge from this bankruptcy with a better understanding of the property and the needs of the merchants who conduct business there,’’ Cohen said.

The Faneuil Hall Merchants Association has long been at odds with General Growth over the increasing number of national tenants and dwindling presence of local retailers. The merchants association recently filed a claim in bankruptcy court that General Growth owes more than $2 million in dues used to market its businesses.

Faneuil Hall Marketplace is owned by the City of Boston, which leases out three of its four buildings - Quincy Market, North Market, and South Market - to General Growth but maintains operation of the historic Faneuil Hall building.

The Boston Redevelopment Authority sent a letter to General Growth earlier this year outlining various breaches of the lease agreement and concerns involving security and maintenance issues.

Brenda McKenzie, economic development director for the Boston Redevelopment Authority, said officials from General Growth as recently as this week confirmed their plans to improve maintenance of bricks, make lighting upgrades, and make other capital expenditures.

“It is a positive to have the cloud of bankruptcy removed from the property,’’ she said. “We continue to work with General Growth on upgrades and maintenance issues.’’

Jenn Abelson can be reached at abelson@globe.com.