Centro Properties Group used a complicated and often-opaque capital structure to grow into one of the world's largest and most debt-laden shopping-center owners.

But now that Centro is in hot water with its lenders, that structure is serving a new purpose: It has become one of the factors deterring creditors from liquidating the company, based in Melbourne, Australia, that owns interests in roughly 670 shopping centers in the U.S. and 130 in Australia.

"Centro has been like the game of Jenga: 'Watch the tension mount as the tower builds,'" says Andrew Parsons, managing director of Sydney-based Resolution Capital Ltd., a Centro investor that sold its shares in January amid the company's struggles. "Right now, the banks don't know which piece they can pull out without the whole thing falling over."

Centro Properties Group's structure may be keeping it out of bankruptcy. Here, the Venetian Isle Shopping Center in Lighthouse Point, Fla.

Banks have been wrestling with the tangled company since December, when Centro was unable to repay $3.4 billion in short-term debt. Since then, Centro's shares, which are traded on the Australian Securities Exchange, have fallen below one Australian dollar (95 U.S. cents) from as high as A$10 last year, a sign investors don't believe the company's assets are worth much more than its roughly $16 billion in total debt. UBS AG analyst Stephen Rich estimated in February that Centro's net-asset value is just 73 Australian cents per share.

Nevertheless, Centro earlier this month persuaded holders of its short-term debt -- including J.P. Morgan Chase & Co., Commonwealth Bank of Australia and Bank of America Corp. -- to extend the repayment deadline a fourth time, this time until Dec. 15. To be sure, much of the reason creditors are reluctant to foreclose now is that Centro's shopping centers would be difficult to sell in the current weak credit environment.

But there is an additional argument against liquidating Centro at this point: Bankruptcy could undermine the value of some of its parts while opening up a Pandora's box of competing interests. Centro's structure includes a web of cross-collateralizations, transferred assets and Centro entities invested in one another.

For example, Centro's most-lucrative business comes from fees it gets for managing shopping centers owned mostly by Centro's outside investors. That business generated fees of more than US$130 million in last year's second half, making it the fastest-growing contributor to Centro profit. But if Centro enters Australian bankruptcy it automatically loses those management contracts and the income they generate.

Another complication is that Centro owns only minority stakes in many of its shopping centers. The majority stakes are owned by roughly three dozen funds that Centro created mostly for mom-and-pop investors. Two of the funds own no shopping centers themselves but instead hold stakes in many of the property-owning funds. As a result, trying to sell most of the real estate would be a huge headache.

Centro instead has been attempting to raise cash by selling the few properties in which it owns majority stakes and trying to attract a major capital infusion for the parent company. But these efforts so far have been disappointing.

In early April, several investors, including Citadel Investment Group Inc., offered to buy equity in the parent but at prices of around A$1 a share, which Centro felt was insufficient, according to people familiar with the matter. Centro so far hasn't struck a sufficient deal to sell the 30 U.S. properties it put on the block. Interested bidders in 25 Australian properties the company offered -- which are collectively valued at nearly US$2.2 billion -- couldn't assemble the financing to make such a large purchase.

A Centro spokesman played down the complexity issue, saying the main reason the company has stayed out of bankruptcy is because it is more valuable to creditors as a going concern. But an executive involved in the talks acknowledged Centro's complicated structure was one of the factors keeping it out of liquidation. A representative of J.P. Morgan, one of Centro's largest lenders with more than US$1.5 billion tied up in the company, declined to comment on Centro's situation, as did representatives of other banks.

Centro's capital structure was the brainchild of Andrew Scott, the chief executive who built Centro from a sleepy Australian company upon his arrival in 1997 to a retail-property giant with roughly US$24 billion in assets under management by last year. Under his leadership, the company began creating funds for buying property tapping into a natural demand: the legal requirement in Australia for people to invest 9% of their income in retirement accounts.

Centro's strategy was to buy the shopping centers and resell them to the funds, retaining for itself a minority interest in those funds and, by extension, the properties they held, as well as keeping the contracts to manage those properties for fees. Centro eventually expanded the structure into two tiers of funds, catering to short- or long-term investors, and allowing Centro to widen the pool of investors from which it could recruit and charge fees.

At the height of its buying spree, Centro made three U.S. acquisitions from 2004 to 2007, culminating in its US$3.7 billion purchase of New York-based New Plan Excel Realty Trust last year. But Centro's structure backfired when the company failed to attract new fund investors quickly enough to buy the New Plan Excel properties and couldn't refinance US$3.4 billion in short-term debt from the deal when the credit markets collapsed. In January, with the debt past due, Centro's board asked for Mr. Scott's resignation and paid him US$2.7 million of the US$6.4 million in severance he was due.

Mr. Scott, who didn't return calls requesting comment, said in a January interview with The Wall Street Journal that Centro's board and investors supported the company's rapid growth.

The challenge of pulling Centro out of its abyss has now fallen to Glenn Rufrano, the former CEO of New Plan Excel, named by Centro's board as Mr. Scott's successor. Now that he has coaxed Centro's latest extension out of creditors, he is focusing on unraveling some of Centro's structure to make the company more appealing to potential equity investors. But Mr. Rufrano's ultimate success will depend on whether he is able to sell Centro properties and a major equity stake in a credit-starved market that has had few buyers this year.

Sales of U.S. retail properties fell by 84% in value to US$2.1 billion in March from the same month last year, and early figures indicate April sales will be even lighter, according to market-research firm Real Capital Analytics.

Write to Kris Hudson at kris.hudson@wsj.com

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