Sports Authority Bonus Program for Executives Rejected by Bankruptcy Judge and U.S. Trustee

by San Antonio Attorney

The request of Sports Authority to pay bonuses for executives and conceal the terms has been denied by a bankruptcy judge.  The lawyers of the executives reasoned that they need to hide the terms of the incentives because they were receiving revolting emails from laid off employees.

The bonus program was rejected by the bankruptcy judge who oversees the Chapter 11 case, as stated in a transcript of a court hearing conducted on August 2, 2016.

Lawyers for the unidentified executives requested to reveal as little as possible about the bonus program, for the reason that former employers have been sending them angry emails.

In addition, the off-putting publicity will make it difficult for the executives to get new jobs once the company is dissolved.

Judge Mary Walrath was not satisfied with their argument.  She said it’s not surprising that they are getting emails from fuming former workers.  According to her, it is simply unbefitting to pay bonuses to executives when the workers are being laid off.

U.S. Trustee Hannah McCollum advised the court to reject the incentive request, saying that it is extremely disturbing.  The U.S. Trustee is a federal agency that supervises bankruptcy courts.

Top executives of bankrupt companies are allowed to ask for severance pay and bonus, but it is only legally possible if they prove that the incentives are necessary to helping wind down or reorganize the business.

Ten years ago, Sports Authority was the biggest retailer of sporting goods in America.  But it has been struggling to keep up with Dick’s Sporting Goods.

Upon filing for bankruptcy in March, Sports Authority planned to shut down 140 of its 450 stores in the U.S. When it declared bankruptcy, an estimated 14,500 people were employed by the company.  In April, the company announced that it will have to close all of its stores because it did not have a buyer.

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