By Marie Beaudette
On Tuesday, General Growth Properties Inc. (GGP) will ask the New York bankruptcy court to approve the rules that will govern an auction process to determine who’ll get to sponsor the mall giant’s exit from Chapter 11 protection.

General Growth is backing a plan sponsored by a group of investors led by Brookfield Asset Management Inc. (BAM), which has offered to pump $6.5 billion into the company to finance its exit from bankruptcy. The company postponed a hearing scheduled for this week on the rules to allow it to continue to explore the “full range of offers” it has received.

The company has been fending off advances from rival Simon Property Group Inc. (SPG), which earlier tried to buy the company outright but is now offering a deal set up like the one backed by the Brookfield-led investors.

Simon and hedge fund Paulson & Co. have put forth a plan to pump $6.5 billion into General Growth, along with other investors, in return for two-thirds of the company’s stock when it exits bankruptcy protection. Simon, however, has agreed to forgo a grant of 120 million warrants to buy more General Growth stock, which is part of the Brookfield deal. Simon has also agreed to backstop a $1.5 billion line of credit for General Growth.

At Tuesday’s court hearing, General Growth will ask the court for approval to enter into a preliminary deal with the Brookfield-led investors and to sign off on the auction procedures. According to court papers, the bidding process would last through June 2.

Shareholders of Washington Mutual Inc. (WAMUQ) on Wednesday will ask the Wilmington, Del., bankruptcy court to appoint an examiner to probe a proposed settlement that would leave them empty handed in the company’s Chapter 11 case.

Washington Mutual, the former parent of WaMu bank, has reached a deal to settle a dispute with J.P. Morgan Chase & Co. (JPM) and the Federal Deposit Insurance Corp., which engineered the sale of WaMu to J.P. Morgan in 2008.

The shareholders said an examiner should be appointed to probe the settlement because new information on the collapse of WaMu bank becomes available with “each passing week.”

A U.S. Senate subcommittee and regulatory investigations have brought to light new information about, for example, the role of Goldman Sachs Group Inc. (GS) in WaMu’s risky lending, the shareholders said in court papers.

Washington Mutual’s proposed settlement with J.P. Morgan and the FDIC would release them from claims stemming from the bank’s seizure and sale. The shareholders say lawsuits over the loss of WaMu are worth $20 billion, and WaMu’s former parent should never have agreed to a proposed settlement that leaves them with nothing.

On Tuesday, Station Casinos Inc. will ask the Reno, Nev., bankruptcy court to approve a series of agreements that will serve the basis for its plan to exit Chapter 11 protection.

The plan is based on the sale of many of Station Casino’s assets to Fertitta family, which founded the casino company. Members of the family have agreed to lead a group that includes investment firm Colony Capital and Station’s mortgage lenders that will purchase the more than a dozen of the company’s casinos, including Santa Fe Station, Texas Station and two Fiesta brand casinos, pending higher bids at a bankruptcy court supervised auction.

Station Casinos’ commercial mortgage lenders will get five Las Vegas area casinos. Senior lenders owed $2.5 billion would get a controlling stake in the casino properties and sell 46% of the equity to the Fertittas, according to court papers. Colony Capital will also make a new investment in the company.

Station Casinos filed for bankruptcy protection in July 2009 to restructure $5.7 billion in debt. It owns and operates 18 casinos in Nevada, including the Red Rock Casino Resort Spa, Palace Station Hotel & Casino and Wild Wild West Gambling Hall & Hotel.

Station Casinos rival Boyd Gaming Corp. (BYD), which has offered to buy the company, has said the insider deals the company reached to hasten its bankruptcy exit will stifle its efforts to acquire the casino operator.

 (This item appears in Dow Jones’ Daily Bankruptcy Review newsletter.)

 -By Marie Beaudette, Dow Jones Daily Bankruptcy Review; 202-862-1354

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