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Tops Holding Bankruptcy Objections Filed

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New York State Teamsters Conference Pension & Retirement Fund and the U.S. Trustee assigned to the Tops Holding II case filed with the U.S. Bankruptcy Court separate objections to Tops Holding II’s key employee incentive plan and key employee retention plan.

The trustee asserts, “The United States Trustee objects to the Motion because neither of the proposed bonus plans satisfy the requirements of Section 503(c) of the Bankruptcy Code. Under the proposed KEIP, the Debtors seek to pay significant cash awards to five executives, who admittedly are insiders of the Debtors, to retain their services and to perform their fiduciary duties. Under the proposed KERP, the Debtors seek to compensate at least 115 unidentified individuals with significant bonus payments without providing a sufficient justification for the same. Despite the Debtors’ contentions that the proposed KEIP payments are incentive-based, the KEIP must be reviewed under Section 503(c)(1) because it appears, based on the limited information provided in the Motion, to do no more than pay cash awards to five insider executives to retain their services. The sole performance metrics tied to the KEIP bonus payments are three quarterly EBITDA targets (the ‘KEIP EBITDA Targets’), which are not disclosed in the Motion.”

In addition, “Notably, neither the Motion nor the supporting declarations contain any explanation or evidence justifying how these metrics were reached and what makes them hard to-reach and, therefore, incentivizing….As to the KERP, there is little to no information provided in the Motion as to the identity or responsibilities of the 115 eligible employees. In discussions with the United States Trustee, the Debtors have disclosed that some of the KERP participants hold titles such as ‘vice president’ and ‘director.’ Moreover, it appears that some of the KERP Participants are among the eleven shareholders of the Debtors’ ultimate parent, Tops MBO Corporation. Nonetheless, the Debtors make the bold and unsupported assertion in the motion that no insiders are eligible for the KERP. On the current record, the Debtors cannot meet their burden of establishing that certain of the KERP Participants are not insiders and thus, the Court must employ the strict standards of Section 503(c)(1).”

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The post Tops Holding Bankruptcy Objections Filed appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.


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