General Growth gets OK to exit bankruptcy

General Growth Properties Inc., the second-largest mall owner in the U.S., won court approval to move forward with its plan to exit bankruptcy as creditors protest the proposal.

U.S. Bankruptcy Judge Allan Gropper in New York yesterday approved a summary of the plan, known as a disclosure statement. Under the plan, General Growth would pay creditors in full and provide a recovery to shareholders, which is unusual in a bankruptcy case.

General Growth resolved most objections to the disclosure statement before yesterday's hearing. Unsecured creditors still have "significant" problems with the plan, said Michael Stamer, an attorney for the group. Investors including Fairholme Funds Inc. will be able to receive cash for General Growth bonds to offset their investments, an option not available to other bondholders.

Heirs of Howard Hughes also have objected, saying they won't get the same recovery as creditors or shareholders. Creditors can raise their objections when General Growth asks Gropper to confirm the plan at an Oct. 21 hearing, he said.

General Growth, based in Chicago, filed for bankruptcy last year after failing to refinance its debt load. The company plans to emerge from bankruptcy this year with $8.4 billion in financing.

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