The U.S. Trustee assigned to the Ultra Petroleum case and its official committee of unsecured creditors filed with the U.S. Bankruptcy Court filed with the U.S. Bankruptcy Court separate objections to the Debtors’ key employee incentive plan.
The Trustee asserts, “The Court should deny the Bonus Motion for two reasons. First, the Bonus Plan violates the strict limitations imposed by section 503(c) of the Bankruptcy Code (the ‘Code’). Despite the Debtors’ attempts to disguise this $6.4 million dollar proposal as an ‘incentive’ plan through the use of contrived performance benchmarks, the evidence demonstrates that the bonus payments are primarily retentive in nature and thus subject to section 503(c)(1).” The Trustee also filed a separate objection to the Debtors’ non-insider retention program. That objection explains, “Section 503(c)(1) prohibits transfers to insiders ‘for the purpose of inducing such person to remain with the debtor’s business’ unless the transfers satisfy the express statutory requirements cited above. Here, the Debtors make no showing that the Retention Motion satisfies section 503(c)(1), but instead argue that its requirements are inapplicable because the bonus recipients are not ‘insiders’ of the Debtors.”
The Trustee continues, “Simply put, bald and self-serving statements in the Retention Motion (paragraphs 27 and 28) that all of the identified individuals are not insiders do not provide this Court with an evidentiary basis to make a conclusion on the status of these individuals.”
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