Debtors May Not Be Able To Keep The KEIP

Law360, New York (September 4, 2012, 10:49 AM EDT) -- In two recent decisions[1], the United States Bankruptcy Court for the Southern District of New York denied motions by large Chapter 11 debtors to approve executive bonus plans designated as key employee incentive plans (KEIP), finding that the proposed KEIPs actually were disguised and impermissible retention or “pay to stay” bonus plans for insiders. These are the first opinions to reject so-called KEIPs following a recent line of cases that have approved KEIPs for insiders.

These decisions demonstrate that simply meeting case-specific milestone targets, such as...
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