By Ilaina Jonas

NEW YORK, April 2 (Reuters) - Hedge fund manager William Ackman, who controls 25 percent of General Growth Properties Inc GGP.N shares, said bankruptcy was the best option for the second largest U.S. mall operator, which is facing billions in loans it cannot refinance.

"Bankruptcy is not just designed for companies that are insolvent," Ackman told a packed room of real estate investors, owners, analysts and bankers attending the New York University Schack Institute of Real Estate 14th Annual REIT Symposium.

"Bankruptcy is also designed for companies that are solvent, but have liquidity problems that are due to events outside of their control," said Ackman, head of New York-based Pershing Square Capital Management LP.

General Growth, the Chicago-based real estate investment trust (REIT) faces more than $27 billion in debt that comes due over the next several years and has already defaulted on many mortgage loans and corporate bonds.

A spokesman for the mall owner and operator said it was continuing discussions with "our lenders as it pertains to our current debt situation."

It has repeatedly said that, if it cannot obtain refinancing or loan extensions, it may seek Chapter 11 bankruptcy protection. At the same time, it has been trying to assuage mortgage and bond holders, fighting not to file.

The company owns more than 200 U.S malls in 44 states. Among its holdings are some of the most profitable malls in the country.

"I think it's a great company," Ackman said. "It's got phenomenal assets."