Employee Incentive Plans — Navigating § 503(c)

Law360, New York (September 30, 2009, 3:02 PM EDT) -- The Bankruptcy Abuse and Consumer Protection Act of 2005 purported to eliminate the ability of Chapter 11 debtors in possession to pay bonuses to management through Key Employee Retention Plans.

However, in recognition of the fact that a real need often exists to incentivize key employees to remain with a reorganizing or liquidating business, bankruptcy courts have approved incentive plans providing for payments to insiders and other employees.

Such plans must be carefully crafted to avoid the restrictions on retention bonuses post-BAPCPA.

Executive Compensation and the...
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