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Energy XXI Benefit Severance, Compensation Program Approval Sought

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Energy XXI filed with the U.S. Bankruptcy Court a motion for entry of an order authorizing the Debtors to pay severance to non-insider employees.

The motion explains, “During the prior 12 months, the average cash severance payment to each Eligible Employee severed by the Debtors has totaled approximately $115,000. The Debtors now seek to continue to honor severance obligations to non-insider Eligible Employees under the Severance Program – which the Debtors did not seek to continue in the first-day wages and benefits motion [Docket No. 7] – on a postpetition basis. More specifically, in light of the continued depression in the oil and gas industry, which continues to place increased pressures on the Debtors’ workforce, the Debtors seek authority to honor obligations to Eligible Employees under the Severance Program on a postpetition basis.”

The motion continues, “Granting the relief requested will also permit the Debtors to implement (solely to the extent necessary) possible headcount reductions during the pendency of these chapter 11 cases ahead of consummation of the Debtors’ comprehensive reorganization pursuant to their proposed chapter 11 plan.”

The Debtors filed a separate motion for entry of an order authorizing and approving non-insider compensation program. This motion explains, “This Motion seeks the approval, on a postpetition basis, of the Debtors’ longstanding prepetition non-insider employee compensation program (the ‘Non-Insider Compensation Program’) applicable to the Debtors’ critical non-insider key employees (each, a ‘Participant,’ and, collectively, the ‘Participants’)…the Non-Insider Compensation Program – which was adopted in 2006 and continued in each successive fiscal year – contemplates annual incentive compensation to approximately 239 Participants, which payments are expected to total approximately $4.5 million for the 2016 fiscal year (an average of approximately $18,900 per Participant).” The Court scheduled a June 30, 2016 hearing t consider both the motions.

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