U.S. Bankruptcy Judge Martin Glenn approved a modified version of the plan for executive bonuses sought by, er, executives at the Borders Group on Friday, after the plan was adjusted in response to objections from the creditors panel and the U.S. Trustee’s office of the Justice Department. The Trustee had objected to giving approval to the plan as Borders had yet to so much as present a plan for reorganization. Publishers on the creditors committee felt money should go to repaying creditors, not bonuses to executives. Other observers simply wondered why a team that managed an esteemed company into bankruptcy should get any bonuses at all, let alone bonuses that could more than double their already huge salaries.

But the judge was persuaded, and, according to a Bloomberg News report by Tiffany Kary, the scaled-back deal holds open the possibility of paying a maximum of about $6 million, as opposed to the originally requested $8.2 million, paid out to Borders execs at rates of between 40 – 125% of their base salary. As Kary details, “The low range of bonuses will be paid if Borders negotiates at least $10 million in annual rent reductions on its store leases, and senior management will get 125 percent of their base salary if they recover more than $95 million for unsecured creditors.”

Judge Glenn says the revised plan “is in the best interests of the debtors, their estates, and creditors.”

But a report by Nathan Bomey on Borders hometown news website, AnnArbor.com, notes the new deal comes with a lot of conditions:

… bonuses are tied to the company’s ability to successfully emerge from Chapter 11 or find a buyer that would continue operating the company.

For the top executives, “no payments will be made … for any liquidation or any going out of business sales at the majority of the debtors’ stores, or any plan confirmation by cram down or otherwise, or approval of a sale, over the objection of the” unsecured creditors’ committee, according to a court document.

Well, who knew that “cram down” was a legal term? It certainly does seem to describe what happened here.