The Howard County Council is seeking advice from bankruptcy experts while county lawyers are reading the fine print in the wake of a bankruptcy filing Thursday by General Growth Properties Inc.

After months of speculation about its financial state, officials at General Growth, which owns the majority of land in Town Center, announced Thursday that it filed for Chapter 11 bankruptcy in order to restructure its debt and receive protection from creditors.

The news was not particularly shocking, said County Council chairwoman Mary Kay Sigaty, considering the repeated warnings from General Growth about its struggles to negotiate extensions on paying off its debt.

“I can read those tea leaves as well as anyone else can,” she said. “Those are pretty easy tea leaves to read.”

General Growth, the nation’s second-largest owner of malls, owns the Columbia mall and development rights to the planned community of Columbia.
 
The company’s 30-year master plan to refashion downtown Columbia with a combination of new housing, retail and offices, is currently being reviewed by county officials.

The Mall in Columbia, the master-planned community of Columbia, and the development in Columbia Town Center are not involved in the bankruptcy filings, according to information posted on the company’s Web site
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Other local GGP properties not involved in the filings are the American City Building in downtown Columbia, the Columbia Association building, Towson Town Center, Laurel Commons and Mondawmin Mall.

The  company is going ahead with its plan to redevelop downtown Columbia, said Gregory Hamm, regional vice president and general manager of Columbia for General Growth.

“As we have said many times, a good general plan and zoning will run with the land,” Hamm said. “Regardless of who owns it or what the circumstances are, a quality plan and all that comes with it survives transfers, survives economic ups and downs.”

Some local properties owned by or affiliated with General Growth that are part of the bankruptcy filing include Gateway Overlook shopping center, on the eastern edge of Columbia, and the Hickory Ridge Village Center, in west Columbia.
Hamm declined to comment on the local GGP properties that are involved in the bankruptcy filing.

A spokesman from General Growth’s corporate offices in Chicago was not immediately available for comment.

County Executive Kenneth Ulman said the county solicitor’s office is reviewing GGP’s bankruptcy filing to get “a better understanding of the broader issues” related to the filing.

Ulman acknowledged a sense of anxiety among officials regarding the filing, but added that he “took it as a good sign” that the Columbia mall and the master-planned community of Columbia were not included.

 “We’ve talked about this for the past couple of months, but now that it’s reality, we’re trying to really understand what is means,” he said.

Ulman said he is still looking forward to working with General Growth on its development plans in the county.
 
“We need to move forward in a thoughtful, careful manner,” he said. “I hope there’s a plan approved by the County Council later this year. That plan, while it might not be exactly what General Growth proposed, would represent the county and community vision for Town Center. ... Whatever entity carries out that plan will still have to meet the vision.”

Council chairwoman Sigaty, who represents Town Center and west Columbia, said she, too, was “heartened” to hear that the mall and downtown development plans were not included in the bankruptcy filing.

Nevertheless, the council is seeking advice from bankruptcy attorneys, she said.

Sigaty said she doesn’t expect the bankruptcy filing to have too great an impact on the county’s work on a plan to redevelop downtown Columbia, although it could impact the county’s dealings with General Growth.

“A plan is a good thing to have no matter what,” she said.

General Growth assumed control of Columbia development when it purchased Columbia’s original developer, The Rouse Co., in a $12.6 billion deal in August 2004.
 
Some of the notable properties and shopping centers General Growth acquired with Rouse, including Harborplace in Baltimore and Faneuil Hall Marketplace in Boston, are among the 158 regional shopping centers owned by General Growth that also have filed for bankruptcy.

The day-to-day operations of the company’s shopping centers and other properties should continue as usual, according to a news release from the company.

“While we have worked tirelessly in the past several months to address our maturing debts, the collapse of the credit markets has made it impossible for us to refinance maturing debts outside of chapter 11,” Adam Metz, General Growth’s chief executive officer, said in a statement.

According to a company news release, General Growth’s decision to file for bankruptcy came after “extensive efforts to refinance or extend maturing debt outside chapter 11.”

“Over many months, the company has endeavored to negotiate with its unsecured and secured creditors to obtain the time needed to develop a long-term solution to the credit crisis facing the company,” the press release states. “Unable to reach an out-of-court consensus, the company reluctantly concluded that restructuring under the protection of the bankruptcy court was necessary.”

General Growth officials said they are setting up a $375-million financing arrangement with Pershing Square Capital Management L.P. Once approved by the bankruptcy court, officials say the arrangement will allow them to make payments to keep their shopping centers and properties operating. The company intends to pay for all goods and services it receives after the bankruptcy filing, the release states.

“Our core business remains sound and is performing well with stable cash flows,” Metz said in a statement. “We believe that chapter 11 is the best process for restructuring maturing mortgage loans, reducing the company’s corporate debt, and establishing a sustainable, long-term capital structure for the company.”

Company officials have said for several months that they might have to seek bankruptcy protection if they are unable to refinance debt.

In late March, the company failed to get an extension on payments for about $2.25 billion in bonds.
 
The company had $394.8 million in bonds due March 15 and another $200 million due April 30. Cross-default provisions in the bonds allow holders of the other bonds, which are due in 2012 and 2013, to seek payment if the company defaults on any of the bonds.

Earlier this spring, the company announced it would attempt to cut costs by trimming back its hours at many of its malls, including the Columbia mall, White Marsh Mall, Owings Mills Mall, Towson Town Center, Mondawmin Mall, and Harborplace.

Shorter hours at the Columbia mall begin May 1.

In a recent interview, Hamm said people should not read anything deeper into the change in hours at the mall.

“The mall is one of the economic engines of Howard County, and it will remain so,” he said. “We continue to enthusiastically pursue the revitalization of Columbia.”

Staff writer Derek Simmonsen contributed to this article.

This story has been updated.

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