- In its Oct. 27 supporting statement for the objection, the trustee harshly criticized Celsius.
- Paying executives more in anticipation of a reorganization may seem counterproductive.
U.S. trustee William Harrington is objecting to a Celsius motion. That would pay $2.96 million in retention bonuses to 62 of the company’s 275 workers. In its Oct. 27 supporting statement for the objection, the trustee harshly criticized Celsius.
In the written objection, the following was mentioned:
“It defies logic, not to mention the Bankruptcy Code, that a company where the majority of its functions are no longer providing services, would now propose a multi-million dollar bonus scheme.”
KERP Despite Bankruptcy Claims
The trustee says that Celsius must prove that the incentives are fair in light of the circumstances. Before the “bonus motion,” as it is properly titled, may be approved. The trustee claims Celsius has fallen short since no measurable metrics have been declared.
The criticism does not suggest that Celsius workers are not worthy of a key employee retention programme (KERP), but rather that the data presented by Celsius is inadequate to warrant such a large sum.
By incentivizing positive behavior change throughout the reorganization process, KERPs help brings about the desired results. Paying executives more in anticipation of a reorganization may seem counterproductive, but it’s typically in the best interest of the company.
Details of the KERP beneficiaries have been kept confidential, unlike the information of Celsius creditors; an unredacted breakdown has been supplied only to the court, the Official Committee of Unsecured Creditors, and the trustee.
The trustee has also raised objections, saying that third parties cannot challenge the participants’ potential status as insiders and hence KERP is ineligible. The bonus motion was submitted by Celsius on October 11th, and a hearing on the proposal and associated relief were scheduled for November 1st.
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