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Purdue Pharma: U.S. trustee objects to key employee incentive plan
By Sarah Lizee
Olympia, Wash., Sept. 22 – Purdue Pharma, LP’s motion to authorize implementation of a key employee incentive plan and a key employee retention plan drew an objection from the U.S. trustee overseeing the case, according to a Tuesday filing with the U.S. Bankruptcy Court for the Southern District of New York.
Region 2 U.S. trustee William K. Harrington said in his objection that while the cases have only been before the court for a year, this is the second time that authority to pay bonuses to both insiders and senior executives has been sought.
Initially, authority was given to pay up to an aggregate of $38 million in bonuses.
“Since that authorization was granted, not one victim has received any compensation, no creditors have received any distributions despite the court’s clear direction for the debtors to work with its creditor constituents in order to expedite distributions to victims and creditors,” Harrington said.
“Instead, the debtors seek authority to make additional payments of over $15 million to admitted insiders and seek to pay additional retention bonuses to other executives.”
The trustee also said that the metrics that the bonuses are based on are “so vaguely described that it is impossible to determine their terms and whether the insiders were compensated for the same tasks during the first round of bonuses.”
Harrington said that, absent more information, it appears that the incentive awards are “nothing more that retention payments awarding insiders for merely staying with the debtors.”
Purdue Pharma is a Stamford, Conn.-based drug manufacturer. It filed for Chapter 11 bankruptcy on Sept. 15, 2019 under case number 19-23649.
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