Bankrupt General Growth will pay out $47.5 mil in bonuses

Bankrupt shopping mall owner General Growth Properties Inc. won a judge's permission to spend as much as $47.5 million a year for two years on bonus payments, $11.6 million of which would go to the top 12 executives.

U.S. Bankruptcy Judge Allan Gropper in Manhattan today approved the bonuses for the nation's second-largest shopping mall owner, saying "it appears that the plans are incentive plans and not for the benefit of insiders."

The bonuses will be paid in 2009 and 2010 if certain performance targets are met, according to court records. The bonus pool for the top 46 executives will be increased by $5 million if the company emerges from bankruptcy prior to June 30. The company projected the bonuses would amount to 2 percent of net operating income for the two years.

General Growth, based in Chicago, filed the biggest real- estate bankruptcy in U.S. history in April after amassing $27 billion in debt during an acquisition spree that left it behind only Simon Property Group Inc. in mall ownership.

Under the bonus plan, managers making up about a quarter of pool participants will get 86.6 percent of the cash, according to court papers. The committee representing unsecured creditors supported the incentive payments. There were no objections to the plan today in court.

Unsecured creditors attorney Michael Stamer said the bonus plan was approved by all parties after "spirited negotiations."

The case is In re General Growth Properties Inc., 09-11977, U.S. Bankruptcy Court for the Southern District of New York (Manhattan).