Samuels Jewelers – U.S. Trustee Objects to KERP and KEIP Motion, Citing Possibility of Improper Conduct and Failure to Satisfy Statutory Requirements

September 25, 2018 – The U.S. Trustee in the Samuels Jewelers case filed an objection [Docket No. 278] to the Debtors’ motion for entry of an order authorizing the Debtors’ proposed key employee retention program (the “KERP”) and key employee incentive program (the “KEIP”) [Docket No.137]. The Trustee states, “The U.S. Trustee objects to the Motion on the basis that approval of the relief sought therein is premature at this time given the Court’s order directing the appointment of an examiner. It is not known at this time whether any of the KEIP or KERP participants may have engaged in improper conduct. Because of this uncertainty, the KERP Motion should not be granted at this stage. Second, the U.S. Trustee objects to the Motion to the extent it seeks approval of a KEIP covering three insiders, because the Debtor has not satisfied its burden under 11 U.S.C. § 503(c) to demonstrate, inter alia, that (i) payments under the KEIP are not retention payments and (ii) the KEIP is justified by the facts and circumstances of these cases.”