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Diamond 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 documents.

"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, timeframes."

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.

CLICK HERE for full text of motion.

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