The United States Trustee assigned to the Energy & Exploration Partners’ case filed with the U.S. Bankruptcy Court an objection to Energy & Exploration Partners’ motion approving voluntary settlement and release agreement between the Debtors and CEO B. Hunt Pettit.
The trustee asserts, “The United States Trustee objects to the proposed Settlement Agreement between the Debtors and CEO B. Hunt Pettit for four reasons. First, the proposed $1 million payment to Mr. Pettit is governed by 11 U.S.C. section 503(c)(2), which requires the Debtors to demonstrate that the payments are part of a program applicable to all full-time employees and are not greater than ten times the amount of the mean severance pay given to non-management employees during the calendar year in which payment is made. Second, if the court determines that section 503(c)(3) governs this agreement, approval should be denied because the agreement is outside the ordinary course of business and it is not justified by the facts and circumstances of these cases. Third, the proposed $1 million payment violates the absolute priority rule. Fourth, the Settlement Agreement impermissibly releases the Debtors’ professionals from liability.”
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