Court Locations

Greenbelt
6500 Cherrywood Ln - Greenbelt, MD 20770 - Main Tel: 301-344-8018 map
Baltimore
101 W Lombard St Room 8530 - Baltimore, MD 21201 - Main Tel: 410-962-2688
map

On remand from the U.S. district court (which held that certain key employees of the Chapter 11 debtor were officers and therefore subject to the provisions of Section 503(c)(1) as insiders of the debtor), the issue was whether any of five employees could satisfy limitations set forth in the statute in order to receive payments under a Key Employee Retention Plan (“KERP”). Held, Section 503(c)(1) requirements not satisfied by the agreement of the purchaser of Chapter 11 debtor corporation’s stock (pursuant to confirmed plan) to pay the same compensation as that proposed by the KERP, because the agreement to match the debtor’s KERP was not a bona fide job offer as not coming from a different business, and therefore not an offer in competition with the KERP. As being the same business as that of the debtor, the purchaser’s offer did not test the value of the KERP as a competing offer.

Entered: 
2010-02-25
Case: 
07-21814
Judge: 
James F. Schneider