WGM Retention
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WEIL, GOTSHAL & MANGES LLP 767 Fifth Avenue New York, New York 10153 Telephone: (212) 310-8000 Facsimile: (212) 310-8007 Marcia L. Goldstein Gary T. Holtzer Adam P. Strochak Stephen A. Youngman ( pro hac vice pending ) Sylvia A. Mayer ( pro hac vice pending ) Proposed Attorneys for Debtors and Debtors in Possession UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ---------------------------------------------------------------x : In re : Chapter 11 Case No. : GENERAL GROWTH : 09 - ______ ( ) PROPERTIES, INC., et al. , : : (Joint Administration Requested) Debtors. : ---------------------------------------------------------------x DEBTORS’ APPLICATION PURSUANT TO SECTIONS 327(a) AND 328(a) OF THE BANKRUPTCY CODE AND RULE 2014(a) OF THE FEDERAL RULES OF BANKRUPTCY PROCEDURE FOR AUTHORIZATION TO EMPLOY AND RETAIN WEIL, GOTSHAL & MANGES LLP AS ATTORNEYS FOR THE DEBTORS NUNC PRO TUNC TO THE COMMENCEMENT DATE TO THE HONORABLE UNITED STATES BANKRUPTCY JUDGE: South Street Seaport Limited Partnership, its ultimate parent, General Growth Properties, Inc. (“ GGP ”), and their debtor affiliates, as debtors and debtors in possession (collectively, “ General Growth ” or the “ Debtors ”), 1 submit this application (the “Application ”) and respectfully represent as follows: 1 A list of the Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, is attached hereto as Exhibit “A” . NY2:\1969689\35\167TL35!.DOC\47658.0007 I. BACKGROUND 1. Commencing on April 16, 2009 (the “ Commencement Date ”) and continuing thereafter, the Debtors each commenced a voluntary case under chapter 11 of title 11 of the United States Code (the “ Bankruptcy Code ”). The Debtors are authorized to operate their business and manage their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. Contemporaneously herewith, the Debtors filed a motion seeking joint administration of their chapter 11 cases pursuant to Rule 1015(b) of the Federal Rules of Bankruptcy Procedure (the “ Bankruptcy Rules ”). II. THE DEBTORS’ BUSINESS 2. GGP is a publicly-traded real estate investment trust (“ REIT ”) headquartered in Chicago, Illinois. GGP, along with its approximately 750 wholly owned Debtor and non-Debtor subsidiaries and affiliates (collectively, the “ GGP Group ”), 2 comprise one of the largest shopping center REITs in the United States, measured by the number of shopping centers it owns and manages. GGP is the general partner of GGP Limited Partnership (“ GGP LP ”), which is the entity through which substantially all of the GGP Group’s business is conducted. GGP LP, in turn, owns or controls, directly or indirectly, GGPLP, L.L.C., The Rouse Company LP (“ TRCLP ”), and General Growth Management, Inc. (“ GGMI ”). GGMI is a non- Debtor affiliate that provides management and other services to the GGP Group, to certain joint ventures of the GGP Group, and to third parties in which the GGP Group does not hold an ownership interest. 2 GGP owns 96% of GGP LP, and outside parties hold the remaining 4%. Consequently, while the Debtors refer to subsidiaries owned directly or indirectly by GGP and GGP LP as “wholly owned,” a small percentage of GGP LP actually is held by outside parties. NY2:\1969689\35\167TL35!.DOC\47658.0007 2 3. The GGP Group operates its business on an integrated basis with centralized administration, leasing and management functions that enable the GGP Group to achieve operating efficiencies and revenue enhancement benefiting the overall enterprise. The Debtors include various wholly owned holding companies and project level operating companies. The non-Debtor subsidiaries and affiliates similarly include various holding companies, management companies, and project level operating companies, as well as all of the joint venture operations. 4. For purposes of public financial reporting, GGP divides its operations into two business segments: (i) Retail and Other, which includes the operation, development and management of shopping centers, office buildings, and other commercial properties, and is the GGP Group’s primary business; and (ii) Master Planned Communities, which includes the development and sale of land, primarily in large-scale, long-term community development projects. The net operating income (“ NOI ”) for GGP’s Retail and Other segment was $2.59 billion in 2008, a 4.5 percent increase over 2007. The NOI for the substantially smaller Master Planned Communities decreased from prior years and was approximately $29 million in 2008. A. Retail and Other 5. The GGP Group owns a portfolio of more than 200 regional shopping centers located in major and middle markets throughout 44 states, including joint venture interests in approximately 48 shopping centers. The GGP Group also owns non-controlling interests in two international joint ventures that own shopping centers in Brazil and Turkey. The shopping centers in which the GGP Group has an ownership interest, or for which it has management responsibility, have approximately 200 million square feet of space and contain over 24,000 retail stores, department stores, restaurants, and other amenities. NY2:\1969689\35\167TL35!.DOC\47658.0007 3 6. The primary source of revenue for the Retail and Other segment is tenant rent. The GGP Group’s retail leases generally include both a base rent component and a charge for the tenant’s share of expenses associated with the operation of the applicable shopping center, such as real estate taxes, utilities, insurance, maintenance costs, security costs, and other general operating expenses. Many of the retail leases also contain scheduled increases during the term of the lease and an overage rent provision under which the tenant may be required to pay additional rent based upon its annual sales. With respect to shopping center properties owned by, or in joint ventures with, third parties, the GGP Group generally conducts its property management activities through GGMI. Consequently, in addition to its rental income, the GGP Group’s Retail and Other segment also reports revenue earned from such property management services, as well as from strategic partnerships, advertising, sponsorship, vending machines, parking services, and the sale of gift cards. B. Master Planned Communities 7. In addition to its core shopping center business, the GGP Group also owns and develops large-scale, long-term master planned communities. GGP Group has five master planned communities located in and around Columbia, Maryland; Summerlin, Nevada; and Houston, Texas. These communities contain approximately 18,500 saleable acres of land. They feature residential, retail, office and mixed-use components as well as schools, civic spaces and other amenities including parks, lakes, golf courses, and wilderness trails. The master planned community segment’s revenue is generated primarily from the sale of improved land to homebuilders and commercial developers. NY2:\1969689\35\167TL35!.DOC\47658.0007 4 C. Financials 8. As of December 31, 2008, the GGP Group as a whole reported approximately $29.6 billion in total assets and approximately $27.3 billion in total liabilities (including the GGP Group’s proportionate share of joint venture indebtedness). Of the $27.3 billion in total liabilities, $24.85 billion represents the aggregate consolidated outstanding indebtedness of consolidated entities, which includes $6.58 billion in unsecured, recourse indebtedness and $18.27 billion in debt secured by properties. For 2008, the GGP Group reported consolidated revenue of approximately $3.4 billion and net cash from operating activities of $555.6 million. The GGP Group employs approximately 3,700 people. Additional information regarding the Debtors’ business, capital structure, and the circumstances leading to these chapter 11 cases is contained in certain declarations filed concurrently herewith (collectively, the “ Declarations”). III. JURISDICTION 9. This Court has subject matter jurisdiction to consider and determine this matter pursuant to 28 U.S.C. § 1334. This is a core proceeding pursuant to 28 U.S.C. § 157(b). Venue is proper before this Court pursuant to 28 U.S.C. §§ 1408 and 1409. IV. BASIS FOR RELIEF REQUESTED A. The Retention of WG&M 10. The Debtors have been informed that Marcia L. Goldstein and Gary T. Holtzer, members of WG&M, as well as other members of, counsel to, and associates of WG&M who will be employed in these chapter 11 cases, are members in good standing of, among others, NY2:\1969689\35\167TL35!.DOC\47658.0007 5 the Bar of the State of New York and the United States District Court for the Southern District of New York. 11. The Debtors have selected WG&M as their attorneys because of the firm’s recognized expertise in the field of debtor’s protections, creditors’ rights, and business reorganizations under chapter 11 of the Bankruptcy Code as well as WG&M’s extensive knowledge of the Debtors’ business and financial affairs. Specifically, over the last several decades, WG&M has been actively involved in many major chapter 11 cases. WG&M currently represents or has represented the following debtors: I & II, P.A. Bergner & Co. Holding Company; Adelphia Business Solutions, Inc.; Agway, Inc.; AI Realty Marketing of New York, Inc.; Ames Department Stores, Inc.; APW Ltd.; Armstrong World Industries, Inc.; Atkins Nutritionals, Inc.; Best Products Co., Inc.; Bethlehem Steel Corporation; Bruno’s, Inc.; Carmike Cinemas, Inc.; Charys Holding Co., Inc. and Crochet & Borel Services, Inc.;