Petitions to "Incentivize" Senior Management to
Tune of $656,000
Diamond Glass has filed a motion for an order "authorizing
payment of incentive pay to senior management." The motion
will be reviewed at the next scheduled hearing in the case on April
24. Diamond filed for a petition for reorganization under Chapter
11 on April 1 (CLICK
HERE for related story).
In the motion, counsel for the Kingston, Pa.-based company writes,
"To incentivize a maximum of 21 executives, vice presidents
and regional managers remaining in the Debtors' employ, the Debtors
have developed an executive incentive plan (EIP), which aligns the
interests of Senior Management with the interests of the Debtors'
stakeholders." The payments, however, would be "contingent
upon the Debtors' successful and timely completion of an asset sale,
satisfying certain cash receipts projections as provided pursuant
to the DIP facility, the amounts distributed to unsecured creditors
and confirmation of the Debtors' Chapter 11 Plan."
Court documents show that, if approved, the plan would have a maximum
aggregate payout of $656,000.
As basis for this relief, the motion notes that "members of
Senior Management have been called upon to take on significant responsibilities
in addition to their normal day-to-day functions."
It continues, "Currently, their additional responsibilities
include providing assistance to the Debtors' bankruptcy counsel
and advisors with respect to issues arising in the bankruptcy cases,
reviewing sale solicitation materials, preparing business plans,
gathering and coordinating the dissemination of due diligence information
and reviewing, commenting on and negotiating the terms of proposed
asset purchase agreements and related documents."
The motion for the incentive plan was not made as a way to retain
senior management, but rather to motivate them, according to court
"The dedication of the members of the Senior Management remains
critical if the Servicing Sales is to be closed and the sales of
the Debtors' remaining assets are to be conducted in a fashion that
brings the maximum return to these estates."
The motion notes that funds for the incentive plan would be "tied
directly to the proceeds received by the Debtors as a result of
the Asset Sales."
The authors of the motion cite several other bankruptcy cases in
which such plans were approved, including Werner Holding Co. Inc.,
Global Home Products LLC, Riverstone Networks Inc., Plaint Corp.
and Nobex Corp.
"The Debtors strongly and reasonably believe that the EIP is
critical to their ability to maximize returns to creditors,"
the attorneys write, in closing. "With regard to the Asset
Sale-related components of the EIP, the payments are essential to
motivate the Plan Participants to dedicate themselves to ensuring
that maxium value is achieved within reasonable, yet expedited,
The motion was authored by Michael P. Richman, Keith C. Owens and
Erika Morabito of Foley & Lardner LLP in New York, who are acting
as pro hac vice counsel for Diamond, along with Michael R. Nestor
and Joseph M. Barry of Young Conaway Stargatt & Taylor LLP.
for full text of motion.
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