UPDATE 2-Mall owner General Growth switches bankruptcy counsel

Sun Jan 4, 2009 10:29pm EST

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NEW YORK Jan 4 (Reuters) - U.S. mall owner General Growth Properties Inc (GGP.N) has switched bankruptcy counsel to Weil, Gotshal & Manges, parting with Sidley Austin LLP, a representative of General Growth told Reuters late Sunday.

General Growth is also hiring another law firm - Kirkland & Ellis - as bankruptcy counsel for some of it subsidiaries, another source familiar with the matter told Reuters.

The General Growth representative, who requested not to be identified, declined to comment on the reasons behind the switch.

Weil and Kirkland did not return requests from Reuters seeking comment.

General Growth, which owns and manages more than 200 U.S. malls, is struggling to restructure or postpone payment on debt of about $22 billion over the next four years. Large installments of the debt are due in coming months.

The company has not filed for bankruptcy but has warned it might need to do so if it cannot sell assets or win agreement on deadline extensions with its lenders.

Last month, the mall giant said its syndicate of lenders for a $900 million loan had agreed to extend the payment deadline until Feb 12, 2009 on two Las Vegas malls - Fashion Show and Shoppes at the Palazzo.

The company has put three Las Vegas malls and three high-end malls in Boston, New York and Baltimore up for sale as it tries to dig out of debt.

The sagging U.S. economy and global credit crunch has hurt mall owners as they rely heavily on debt to finance mall purchases and improvements, while weaker business conditions have put a strain on rental income from tenants.

Weil Gotshal has worked on notable bankruptcies including those of Lehman Brothers Holdings, Bethlehem Steel Corp and Marvel Entertainment Group.

The firm was also recently hired to advise General Motors Corp (GM.N) and Extended Stay Hotels, the Journal said, neither of which have sought bankruptcy protection. (Reporting by Jui Chakravorty Das and Chelsea Emery; Editing by Anshuman Daga)

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