Mills Corp.'s situation continues to rapidly deteriorate, even in the face of sweeping changes senior management put in place in response to a series of accounting missteps. Most recently the company was hit with a slew of class-action shareholder lawsuits. And its longtime funding partner, KanAm, froze the assets of two of its open-ended property funds (which invested heavily in Mills) after a host of investors cashed out of the funds.

The company's stock dropped to a new 52-week low — $36.38 — in the wake of the news. Mills has taken such a beating from investors and analysts that some have actually reversed field and upped their ratings on the stock based on the premise that it's selling at a severe discount to the underlying value of its assets.

The recent moves came on the heels of the announcement that Mills was firing 17 executives and pulling the plug on 10 development projects. It also said it would restate earnings going back five years in relation to accounting from its Mills Enterprises Inc. taxable REIT subsidiary. The company will continue to pursue the Meadowlands Xanadu project and will continue to focus on its international efforts in Europe and Canada. It will, however, back off its planned development of Piers 27-31 in San Francisco, which has faced stiff opposition from local residents.

To win back shareholder trust, the company has formed a new internal audit committee and appointed Edward Civera, who spent 25 years with accounting firm Coopers & Lybrand (now PricewaterhouseCoopers) to its board of directors.

KanAm froze the assets of a $579 million fund after $50 million in withdrawals. Activity was halted because the fund was in danger of falling below a 5 percent minimum liquidity threshold. The next day, it froze a $3.9 billion fund after a whopping $860.9 million in outflows. The funds are directly invested in about a dozen Mills assets with KanAm typically controlling 50 percent stakes. (The company also was a founding partner of Mills.) From 1994 to 2004, KanAm invested about $1 billion in equity in Mills' development projects. The relationship has been a major factor in Mills' ability to grow its portfolio from four properties to 42 during the past decade.

Meanwhile, at least five different law firms as of press time announced securities class actions had commenced on behalf of Mills shareholders.