Bankruptcy Judge Approves Proposal to Pay Bonuses to Top Execs of Sports Authority

by San Antonio Attorney

Judge Mary Walrath authorized the company to allocate as much as $1.5 million to 3 unidentified senior executives, throwing out the objections of a federal bankruptcy regulator, who argued that the incentive plan was unfair.

Sports Authority’s proposal to give bonuses to executives was approved by a bankruptcy judge on Aug. 31.  The incentives will be collected upon completion of the liquidation process that laid off about 14,000 workers.

Sports Authority has an estimated $400 million worth of products to dispose and hundreds of shops to shut within a few months.  The bankruptcy case is one of the biggest retail liquidations in the United States.

A number of suppliers of the non-operational athletic-gear retailer are receiving only partial recoveries for the products that Sports Authority obtained from them.  The company, which is based in Englewood, filed for Chapter 11 bankruptcy in March and permanently closed many stores by July.

Top executives are going to get full pay and bonuses for doing their job, according U.S. Trustee representative Hannah McCollum.

Andrew Vara, a Justice Dept. Officer who contested the incentive plan, won against a previous version of Sports Authority’s proposal, which include as much as $2.85 million payments to 4 senior executives.

One of the top executives resigned from the company after that court ruling, and the company returned to court with a modified request for additional payments for three executives that remained in the dwindling senior manager ranks.

Former CEO of Sports Authority, Michael Foss, left in June.  The following month, Chief financial officer Jeremy Aguilar resigned.

Between 250 and 300 individuals are still employed by Sports Authority, including restructuring consultants.  Those people are in-charge of winding down the affairs of the company.

Judge Walrath said the remaining work to be done involves sessions of hard negotiations with liquidators that is going to resolve how the proceeds of the liquidation will be divided.  That task calls for senior management, according to Judge Walrath.

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