General Growth Properties Inc. will pay $230 million to some of the heirs of moviemaker and aviation mogul Howard Hughes to settle a dispute over a Las Vegas development.
The nation’s second-largest shopping mall operator, which is trying to emerge from under Chapter 11 bankruptcy protection, said Monday that it will pay at least $10 million in cash, with the remainder to be paid in either cash or stock. All amounts will be paid after General Growth leaves bankruptcy protection, anticipated for sometime later this year.
The dispute centered on the Summerlin community, which houses almost 100,000 residents near downtown Las Vegas. Summerlin contains hundreds of neighborhoods and dozens of villages, nine golf courses, 26 public and private schools, business parks and shopping centers.
General Growth owns The Howard Hughes Corp., developers of Summerlin. It also owns Howard Hughes Properties Inc. General Growth has previously argued that because of its bankruptcy it could cancel final payments to Hughes heirs from its subsidiaries.
General Growth, a Chicago company, filed the largest real estate bankruptcy case in U.S. history in April 2009 under the burden of nearly $28 billion in liabilities. It has since restructured billions in debt and put together a plan to emerge from bankruptcy and pay off creditors in full.
When General Growth leaves bankruptcy protection, shareholders will own stock in two separate companies – General Growth and a newly formed company, initially called Spinco, which will manage a diverse group of properties with little debt that have development potential.
“With this agreement, General Growth settles one of the last remaining material issues impacting the capital structure of the new General Growth and Spinco as we continue our steady march toward emergence from bankruptcy,” President and Chief Operating Officer Thomas H. Nolan Jr. said in a statement.
The settlement is subject to bankruptcy court approval.
General Growth currently owns and manages interest in more than 200 regional shopping malls in 43 states. It also owns commercial office buildings and planned communities.