The U.S. Trustee assigned to the Uni-Pixel case filed with the U.S. Bankruptcy Court an objection to the Debtor’s key employee incentive program (KEIP).
The Trustee asserts, “The United States Trustee objects to the Motion on the grounds that the Debtors have not satisfied their burden under 11 U.S.C. sections 503(b)(1)(A) and 503(c) to demonstrate, inter alia, that (i) the persons to whom payments would be made under the KEIP (‘KEIP Beneficiaries’) are employees of the Debtors; (ii) if the KEIP Beneficiaries are employees, payments are not primarily retention payments to insiders; (iii) payments under the KEIP are justified by the facts and circumstances of these cases; and (iv) the KEIP represents the ‘actual, necessary cost of preserving the estate[s].'”
In addition, “Moreover, if the KEIP Beneficiaries are not employees, it is unclear in what capacity they are providing services and whether their retention is consistent with the Bankruptcy Code. The United States Trustee also objects to the Debtors’ assertions that the KEIP is subject to review under the business judgment rule and that 11 U.S.C. section 105 provides statutory authority for the requested relief. Accordingly, the United States Trustee requests that this Court deny the Motion.”
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