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Borders Bonus Plan Rejected Must Be Revamped Date: 4/18/2011 |
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The plan to award retention bonuses to key executives at bankrupt book chain Borders (see ?Decision Due on Borders Bonuses?) was rejected by the judge and the company?s lawyers were ordered to negotiate with the trustee, who opposed the plan, according to Bloomberg. The bonus plan was changed before it was submitted in court, with bonus amounts in the proposal now tied to the amount of recovery for the unsecured creditors. Bonuses to Borders execs would only be paid if a reorganization plan was confirmed or the company was sold by August 15th. The thresholds for the proposed plan were at $73 and $98 million for the unsecured creditors. The company has unsecured debt of $178 million to its suppliers alone (see ?Borders Files Chapter 11?), a number that does not include its non-supplier creditors and its landlords, which would seem to indicate that Borders will likely pay well under half its debts to its unsecured creditors. If the company survives as an independent entity, a prospect that is looking increasingly unlikely, equity could be issued to the unsecured creditors to compensate them for the loss of a portion of their debt from Borders. |
| Source: ICv2 |
