Hampshire Group’s official committee of unsecured creditors filed with the U.S. Bankruptcy Court an objection to the Debtors’ motion to employ William Drozdowski as chief financial officer.
The committee asserts, “The Debtors ask the Court to bless Mr. Drozdowski’s retention under section 327(b). They seek to grant him a raise of up to 37.5% over his capped monthly prepetition fee. Such retention is inappropriate under section 327(b) because Mr. Drazdowski was an independent contractor prepetition and therefore his retention is beyond the scope of section 327(b) (which permits only the continued retention or replacement of salaried employees). Moreover, to the extent the retention is appropriate under section 327(b), his proposed raise is nothing more than a thinly veiled – and prohibited – key employee retention plan (a ‘KERP’).”
In addition, “To be clear, the Committee questions the need for a highly compensated CFO in these cases given that the Debtors principally have to sell inventory and collect receivables. However, the Committee does not object to Mr. Drozdowski’s retention through February based on the same terms as his prepetition retention.”
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