According to The Daily Record, GGP is authorized to pay out $11.6 million in bonuses to its top 12 executives, $6 million in bonuses to 35 senior executives, and $30 million in bonuses to 706 regional shopping mall managers and 2,122 additional employees during the next two years. Bonuses will be entirely cash-based as the bankrupt company’s stock is currently worth less than $2 a share. Bonus values are estimated as they are tied to 2009 salary figures, which have not been made public.
In addition, if GGP exits bankruptcy by June 30, 2010, the company will be allowed to distribute an extra $10 million bonus pool to employees. GGP will receive an extra $5 million bonus pool if its exits bankruptcy between July 1 and September 30, 2010, and no extra bonus pool money after that date.
The Daily Record quotes a GGP spokesperson as saying the company’s creditor committee supports the bonus plan. This may result from a favorable bankruptcy court ruling on August 11, 2009 that holds the potential to make it harder for creditors to obtain repayment.
According to Retail Traffic, Judge Gropper is allowing GGP to hold special purpose entities (SPEs) that are traditionally considered outside the realm of corporate bankruptcy in its bankruptcy filing. Furthermore, the SPEs in question are not considered to be in financial distress. In June, creditors including ING Capital Loan Services LLC, Helios AMC, LLC, Metropolitan Life Insurance Company, and KBC Bank, N.V. had asked the bankruptcy court to disallow the SPEs from GGP’s filing. If the ruling stands, funds from the SPEs will go toward corporate restructuring rather than repaying creditors. Thus creditors may be more willing to accept the bonus plan as a means of getting GGP out of bankruptcy as quickly as possible, even though it uses money that potentially could help pay GGP’s debts.
In another recent legal development, Mary Bucksbaum Scanlan, an heiress to what was once the GGP fortune, is suing attorneys Marshall Eisenberg and Earl Melamed and their law firm, Neal, Gerber & Eisenberg, along with trustee General Trust Co., for alleged improprieties relating to the handling of GGP-related stock and trusts. According to the Chicago Tribune, Scanlan said she has lost $1.7 billion since the collapse of GGP, and she blames the defendants in her suit for $300 million of those losses.
In June, GGP proposed a seven-year plan to fully repay all creditors. The company has been trying to restructure and refinance its debt for months.
According to Commercial Real Estate Examiner, GGP’s plan involves a seven-year extension of its secured and unsecured loans at their current interest rates. GGP says this would allow it to create a cash flow large enough to pay off all debts. In a presentation [pdf] at a recent investment research conference, GGP made arguments in favor of the plan such as the mall industry is more stable than retail in general due to its reliance on long-term leases, 82% of its debt is fixed-rate, and its malls have a 90.9% occupancy rate. The bankruptcy court is still determining a restructuring and repayment plan for GGP.
GGP’s proposal follows recent motions by a number of lenders to its malls requesting the properties be removed from GGP’s bankruptcy filing. According to Reuters, lenders are saying the loans in question are not in default danger and that GGP is using Chapter 11 bankruptcy to obtain leverage in debt negotiations. A hearing on the matter is scheduled for June 17, 2009.In December last year GGP hired AlixPartners to help it turn around. Its team is lead by Managing Director James A. Mesterharm, whose declaration in support of first day motions can be found here (pdf). Weil, Gotshal & Manges LLP and Kirkland & Ellis LLP have been retained as counsel and co-counsel to the debtors. The case has been jointly filed under number 09-11977 with the United States Bankruptcy Court, Southern District of New York. The court, headed by judge Stuart M. Bernstein for the last nine years, has had many high profile “mega cases” under its jurisdiction since the current recession began, including BearingPoint, Star Tribune and Lehman Brothers.This filing lists many entities but excludes some third-party businesses and joint ventures. Along with retail locations, 11 office properties, one master planned community and six properties still under development are part of the filing properties, while many operating properties are not involved in the filings. More details, including contact information for the attorneys representing GGP, are available from a website maintained by noticing agent Kurtzman Carson Consultants.
With roughly 200 million square feet of retail space and 24,000+ stores across 44 states, GGP is the second-largest mall owner in the US behind Simon Property Group. It employs approximately 3,700 people directly and many more indirectly.
In addition, if GGP exits bankruptcy by June 30, 2010, the company will be allowed to distribute an extra $10 million bonus pool to employees. GGP will receive an extra $5 million bonus pool if its exits bankruptcy between July 1 and September 30, 2010, and no extra bonus pool money after that date.
The Daily Record quotes a GGP spokesperson as saying the company’s creditor committee supports the bonus plan. This may result from a favorable bankruptcy court ruling on August 11, 2009 that holds the potential to make it harder for creditors to obtain repayment.
According to Retail Traffic, Judge Gropper is allowing GGP to hold special purpose entities (SPEs) that are traditionally considered outside the realm of corporate bankruptcy in its bankruptcy filing. Furthermore, the SPEs in question are not considered to be in financial distress. In June, creditors including ING Capital Loan Services LLC, Helios AMC, LLC, Metropolitan Life Insurance Company, and KBC Bank, N.V. had asked the bankruptcy court to disallow the SPEs from GGP’s filing. If the ruling stands, funds from the SPEs will go toward corporate restructuring rather than repaying creditors. Thus creditors may be more willing to accept the bonus plan as a means of getting GGP out of bankruptcy as quickly as possible, even though it uses money that potentially could help pay GGP’s debts.
In another recent legal development, Mary Bucksbaum Scanlan, an heiress to what was once the GGP fortune, is suing attorneys Marshall Eisenberg and Earl Melamed and their law firm, Neal, Gerber & Eisenberg, along with trustee General Trust Co., for alleged improprieties relating to the handling of GGP-related stock and trusts. According to the Chicago Tribune, Scanlan said she has lost $1.7 billion since the collapse of GGP, and she blames the defendants in her suit for $300 million of those losses.
In June, GGP proposed a seven-year plan to fully repay all creditors. The company has been trying to restructure and refinance its debt for months.
According to Commercial Real Estate Examiner, GGP’s plan involves a seven-year extension of its secured and unsecured loans at their current interest rates. GGP says this would allow it to create a cash flow large enough to pay off all debts. In a presentation [pdf] at a recent investment research conference, GGP made arguments in favor of the plan such as the mall industry is more stable than retail in general due to its reliance on long-term leases, 82% of its debt is fixed-rate, and its malls have a 90.9% occupancy rate. The bankruptcy court is still determining a restructuring and repayment plan for GGP.
GGP’s proposal follows recent motions by a number of lenders to its malls requesting the properties be removed from GGP’s bankruptcy filing. According to Reuters, lenders are saying the loans in question are not in default danger and that GGP is using Chapter 11 bankruptcy to obtain leverage in debt negotiations. A hearing on the matter is scheduled for June 17, 2009.In December last year GGP hired AlixPartners to help it turn around. Its team is lead by Managing Director James A. Mesterharm, whose declaration in support of first day motions can be found here (pdf). Weil, Gotshal & Manges LLP and Kirkland & Ellis LLP have been retained as counsel and co-counsel to the debtors. The case has been jointly filed under number 09-11977 with the United States Bankruptcy Court, Southern District of New York. The court, headed by judge Stuart M. Bernstein for the last nine years, has had many high profile “mega cases” under its jurisdiction since the current recession began, including BearingPoint, Star Tribune and Lehman Brothers.This filing lists many entities but excludes some third-party businesses and joint ventures. Along with retail locations, 11 office properties, one master planned community and six properties still under development are part of the filing properties, while many operating properties are not involved in the filings. More details, including contact information for the attorneys representing GGP, are available from a website maintained by noticing agent Kurtzman Carson Consultants.
With roughly 200 million square feet of retail space and 24,000+ stores across 44 states, GGP is the second-largest mall owner in the US behind Simon Property Group. It employs approximately 3,700 people directly and many more indirectly.
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