Bondholders Sue General Growth (GGP) Demanding Payment

A group of General Growth (NYSE: GGP) bondholders has asked its trustee to sue General Growth for money owed on past-due bonds.

Law firm Wilmer Cutler Pickering Hale and Dorr LLP on Monday sent a letter to General Growth explaining that it represents holders of 25% of the company's $395 million in bonds due last March 16 that weren't paid, according to the Wall Street Journal. Bondholders must collectively represent at least 25% of a given bond issue to get a trustee to act on their behalf.

The bondholders' action does bring General Growth closer to a potential bankruptcy filing, but the action does not necessarily mean one is imminent. A trial brought about by the bondholders' likely will take months to happen. Meanwhile, GGP previously said it would work with its unsecured lenders to draw up an out-of-court restructuring of its balance sheet by the end of June. If General Growth meets that commitment, the trial might not be needed.

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