WARREN - Government attorneys monitoring RG Steel's Chapter 11 bankruptcy case have objected to a company plan to pay bonuses totaling more than $20 million to 10 key management officials.
In a bankruptcy court filing, United States Trustee Roberta DeAngelis said the company wants to seal the names of participants in the Management Incentive Plan. She said it also fails to say which are insiders, or disclose titles, job descriptions or current compensation.
The plan also fails to specify the performance requirements the officials would have to meet to get their bonus, she said.
"Indeed, as described, the (plan) appears to be little more than a key employee retention plan provided that somebody liquidates the Debtors' assets for a price sufficient to start repaying the second lien lenders. The (plan) does nothing to create an incentive for higher levels of individual employee performance," the trustee wrote in the objection.
Money for the bonuses would come from asset sale proceeds before Dec. 31 after paying off the first lien lenders and establishing a reserve for certain other obligations. The trustee noted RG believes that would be done easily because assets surpass the amount owed the first lien lenders.
The bonus pool then could receive as much as $10.6 million in sale proceeds at the second-lien level and $9.675 million at the third-lien level, the trustee's motion states.
RG, which owns the 1,235 worker RG Steel Warren mill, filed for Chapter 11 bankruptcy May 31 in Wilmington, Del., citing weak business conditions.
Creditors originally set a July 27 deadline to sell assets, including the company's largest mill at Sparrows Point, Md. They later agreed to extend the sale deadline by about two weeks in an effort to get the most money.
Under the revised plan, the bankruptcy financing agreement that's supplying cash to the company will end on Aug. 10 instead of July 27.
If RG Steel secures a lead or "stalking horse" bid, its bankruptcy financing would automatically be extended to Aug. 24, allowing 10 more days than the previous extension date. Aug. 24 is considered the absolute "drop dead" date to close a sale.