General Growth's Chapter 11 filing today is a further indication that the retail economy is in a shambles, but it could also be a sign of worse things to come.Mall giant General Growth Properties (GGP, news, msgs) is not just the biggest company to file for bankruptcy protection this year, it's one of the biggest companies to go bust in history. (See a list of the top 15 here). But General Growth, which has $30 billion in assets and filed for Chapter 11 today, may not remain at the top of this year's list for long.
The aggressiveness with which many companies took on debt and made risky investments heading into this downturn, coupled with the unwillingness of many banks to refinance loans, is forcing more companies into bankruptcy than ever before. In March, there were 7,843 corporate bankruptcies, according to bankruptcy data management company AACER, Automated Access to Court Electronic Records. That's a whopping 65% increase from the prior year.
"Given all the debt that companies took on in recent years, coupled with the weak economy, I would expect bankruptcy filings to continue at the current pace throughout the remainder of 2009 and probably well into 2010," says George Putnam III, founder of New Generation Research, the firm behind BankruptcyData.com.
Chicago-based General Growth has a stake in more than 200 shopping malls in 44 states, including such upscale landing spots as South Street Seaport in New York and Faneuil Hall Marketplace in Boston. (Click here to find out if General Growth owns or runs your mall.)
