Gibson Brands' Severance Deals Nixed In Ch. 11 Case

Law360, Wilmington (July 9, 2018, 6:08 PM EDT) -- A request from bankrupt guitar maker Gibson Brands Inc. to assume separation agreements worth $900,000 with 26 employees failed to gain court approval Monday in Delaware when a bankruptcy judge said wages paid under the agreements amounted to prohibited severance payments barred by the bankruptcy code.

During a hearing in Wilmington, U.S. Bankruptcy Judge Christopher S. Sontchi denied the motion from Gibson to assume 26 “garden leave” agreements that paid employees from the company’s May 1 petition date until June 15, while not requiring them to do any actual work and instead telling them to focus on finding new employment from...

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