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LINN Energy Objection Filed

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The U.S. Trustee assigned to the Linn Energy case filed with the U.S. Bankruptcy Court an objection to the Debtors’ (a) employee compensation plan for non-insider employees, (b) critical employee recognition program and (c) executive incentive plan.

The objection asserts, “The Debtors seek an order approving incentive bonuses to six (6) insiders who are members of the senior management team under the Executive Incentive Program (‘EIP’) The Court should deny the Motion for two reasons. First, the EIP violates the strict limitations imposed by section 503(c) of the Bankruptcy Code. Despite the Debtors’ attempts to disguise this $11.647 million dollar proposal as an ‘incentive’ plan through the use of contrived performance benchmarks, the evidence demonstrates that the bonuses are primarily retentive in nature and thus subject to section 503(c)(1).”

Court-filed documents continue, “And even if subject to the more lenient standards in section 503(c)(3), the Debtors have not shown that the EIP is justified by the facts and circumstances of these cases. The Court should not approve the Motion under either framework. Second, the Motion confers administrative expenses status to prepetition bonuses in violation of section 503(b). For the proposed bonuses in the second quarter of 2016, approximately forty-four percent (44%) of the amount relates to services that were rendered prepetition. Because those services were rendered before the commencement of these cases, the express language of section 503(b) precludes their treatment as administrative expenses.”

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