Metalforming key employee retention plan draws U.S. Trustee objection

By Caroline Salls

Pittsburgh, July 11 - Metalforming Technologies, Inc.'s request to implement a key employee retention plan drew an objection from the U.S. Trustee, according to a filing with the U.S. Bankruptcy Court for the District of Delaware.

Trustee Kelly Beaudin Stapleton said she objects to the plan because "it will provide selected senior management with a substantial windfall at the expense of creditors other than insiders."

Also, the trustee said the motion does not disclose the terms of any alleged pre-bankruptcy retention or severance agreements with senior management, nor what percentage of the total cost of the plan will be given to senior management.

Under the plan, payments are to be made to chief executive officer Joseph Ponteri and chief financial officer Mike Wilson using proceeds from the $25 million sale of all Metalforming's assets to Zohar Tubular Acquisition, LLC or another high bidder.

According to the trustee, since both the targeted closing of the sale and the due date on the company's debtor-in-possession loan are Sept. 30, the officers will be paid 12 months of their annual salary plus their ordinary salaries for "about three and a half months' work."

A hearing on the retention plan is scheduled for July 18.

Metalforming, a Chicago-based automobile parts manufacturer, filed for bankruptcy on June 16. Its Chapter 11 case number is 05-11697.

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