The U.S. Trustee assigned to the Toys “R” Us case filed with the U.S. Bankruptcy Court an objection to the Debtors’ senior executive incentive plan.
The Trustee asserts, “With no plan of reorganization on the horizon and great uncertainty as to the projected recoveries by creditors in the cases, the Debtors filed the Bonus Motion requesting, inter alia, authority to pay up to $32 million in bonuses to 17 of its most highly compensated executives. The princely compensation proposed in the Bonus Motion is in addition to the $8.2 million in retention bonuses that five of the same executives received immediately before the bankruptcy filing. It defies logic and wisdom, not to mention the Bankruptcy Code, that a bankrupt company would now propose further multi-million dollar bonuses for the senior leadership of a company that began the year with employee layoffs and concludes it in the midst of the holiday season in bankruptcy.”
The U.S. Trustee also filed a separate objection to the Debtors’ non-insider compensation program. The Trustee argues, “The Debtors filed the Compensation Program Motion requesting, inter alia, authority to pay incentive bonuses to 3,805 employees (the ‘Compensation Program’) totalling between $45 million to $68 million – in addition to the $16 million to $32 million that the Debtors are also proposing to pay in bonuses to their top executives at the same time….There is nothing in the proposed Compensation Program Plan that ties the recoveries of the participants to a plan of reorganization to the recoveries of creditors….There is no evidence that the scope of the plan is fair and reasonable. There is nothing in the Compensation Program Motion to explain why the Debtors chose these 3,805 participants out of the approximately 11,000 full time employees, and why other employees were excluded from the Compensation Program.”
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