November 24, 2020 – The Court hearing the YogaWorks cases issued an order approving the Debtors’ proposed key employee retention plan (the “KERP”) covering 17 non-insiders at a maximum aggregate cost of $60k [Docket No. 184]; the KERP, the Debtors insist, necessary to seeing their asset sale efforts through to completion.
On November 10, 2020, the Court issued an order approving (i) proposed bidding procedures in respect of the sale of substantially all of the Debtors’ assets, (ii) the Debtors’ stalking horse arrangement with YogaWorks Investment Fund LLC (“YWIF” or the “Stalking Horse,” an affiliate of Serene Investment Management (“Serene”) further to which the Stalking horse Bidder has agreed to pace the sale process with an up to $5.0mn bid and (iii) a proposed auction/sale timetable culminating in a December 7th auction and a December 9th sale hearing [Docket No. 141].
The Debtors’ motion requesting the KERP [Docket No. 148] stated, “The retention of each of the Essential Employees is critical to the Debtors’ marketing and sale efforts. Prior to the Petition Date, the Debtors implemented significant reductions in their workforce to reduce their expenses and provide for the efficient operation of the Debtors’ facilities while the Debtors attempted to resolve their liquidity issues. Indeed, as of the Petition Date, the Debtors were left with approximately 205 employees, down from over 2,000 before the COVID-19 pandemic. This reduction has facilitated the desired cost reductions, but has correspondingly significantly increased the work load and responsibilities of all of the Essential Employees. Consequently, the Debtors are at risk that some or all of the Essential Employees may leave their positions with the Debtors, which would be disastrous to the Debtors’ efforts to maximize value for all creditors in these cases.
Each of the Essential Employees is key to the Debtors’ efforts to resolve these cases, and is crucial to the process of selling the Debtors’ assets to maximize the benefit to all of the Debtors’ creditors and the parties-in-interest in these cases. Each of the Essential Employees is critical, hard to replace and has knowledge of the Debtors’ ongoing business operations that must be preserved in order for the Debtor to efficiently administer these cases and market their assets. Even prior to the outset of these cases, the Debtors and their professionals were mindful of the need to retain the Essential Employees during the Debtors’ sale process so as to ensure the best possible outcome for creditors and parties in interest. In that regard, the Debtors’ management team developed a plan to incentivize the Essential Employees to stay with the Debtors through the critical sale process.
Serene [the Purchaser], cognizant of the critical importance of the Plan to the Debtors’ sale efforts, has agreed to include the payments under the Plan as part of its DIP loan, provided the Plan is approved by the Court. Thus, the estates are not diminished, and, in fact are enhanced, by the payment of retention bonuses under the Plan.
The Plan provides for retention payments to the Essential Employees based upon the Essential Employees continuing to remain with the Debtors through the sale of the Debtors’ assets. Those bonuses are equal to less than 6% of each of the Eligible Employee’s current compensation, dependent upon the Essential Employees’ seniority and the Debtors’ view of the level of importance of each employee to the Debtors’ sale efforts. The Essential Employees will be required to use their best efforts to assist the Debtors in their sale process during the course of the cases. The maximum aggregate amount to be paid in retention bonuses under the Plan is $60,000.
Amounts due under the Plan shall be due and payable upon the earliest to occur of: (i) a closing of a sale of the Debtors’ assets; (ii) a closing of a restructuring transaction; or (iii) termination of the Eligible Employee without cause (‘without cause’ shall include, without limitation, termination following conversion) (the ‘Trigger Date’). If the Eligible Employee resigns or is terminated for cause prior to the Trigger Date, he or she will forfeit any right to a payment under the Plan. The payment under the Plan to each Eligible Employee is in lieu of any other retention, severance or other bonus such employees may otherwise be entitled to under any agreement or other employment practice or policy of any of the Debtors.
KERP Payouts
|
Name |
Post-Petition KERP |
Role |
|
Arcilla, Allan M. |
$2,500 |
Business Intelligence Manager |
|
Barragan, Kristian |
$5,000 |
Human Resources Manager |
|
Briones, Roberto |
$2,500 |
Human Resources Coordinator |
|
Crevier, Michelle |
$5,000 |
Accounting Manager |
|
Dominguez, Stephanie |
$2,500 |
Payroll Specialist |
|
Hamati, Henry |
$2,500 |
Senior Digital Product Manager |
|
Johnson, Jessica |
$2,500 |
Customer Service Project Lead |
|
Lee, Janet |
$2,500 |
Manager of MYW and YWL |
|
Loch, Patricia |
$5,000 |
Operations Manager |
|
McDaneld, Jordan |
$5,000 |
FP&A Manager |
|
McKenna, Maya |
$5,000 |
Head of Education and Programming |
|
Pensanti, Rachelle |
$2,500 |
Director of Teacher Training |
|
Ramirez, Evie |
$5,000 |
Payroll Manager |
|
Saxby, Joanna |
$2,500 |
Teacher Manager |
|
Suh, Catherine |
$2,500 |
Graphic Designer |
|
Temple, Justin T |
$2,500 |
Marketing Manager |
|
Yost, William |
$5,000 |
Database Engineer |
|
Total |
$60,000 |
|
About the Debtors
According to the Debtors: “YogaWorks is a leading provider of progressive and quality yoga that promotes total physical and emotional well-being. YogaWorks caters to students of all levels and ages with both traditional and innovative programming. It is also an international teaching school, cultivating the richest yoga talent from around the globe and setting the gold standard for teaching.”
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The post YogaWorks, Inc. – Court Approves $60k KERP for 17 Non-Insider Key Employees Necessary to Asset Sale Process appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.