Justice Department Watchdog Targets Bankruptcy Bonuses
August 3, 2012 -- Dow Jones Daily Bankruptcy Review
Stephen Selbst, Chair of Herrick's Bankruptcy Practice Group, is quoted in an article citing the recent trend of companies (Eastman Kodak Co., Hawker Beechcraft Inc. and Residential Capital LLC) paying bonuses to the same executives who led their companies into Chapter 11 protection. Stephen notes that debtors keep trying to set plans that at least notionally look like incentive plans but which are capable of being achieved. Mr. Selbst said it has led U.S. trustees to be especially vigilant in reviewing incentive plans, leading to a "cat-and-mouse game" between them and the companies they're monitoring. So while incentive plans are no longer new, they still remain a heavily contested subject in large corporate restructurings.