OFS gets OK of employee retention plan, with some modifications

By Sarah Lizee

Olympia, Wash., July 22 – OFS International, LLC received approval of a modified key employee retention plan, according to a Wednesday filing with the U.S. Bankruptcy Court for the Southern District of Texas.

As previously reported, the official committee of unsecured creditors objected to the company’s motion seeking approval of the plan.

“KERPs must be viewed in their appropriate context according to the facts of each case in order to balance the business needs of the debtors against the rights of other stakeholders, including general unsecured creditors,” the committee said in its objection.

The debtors propose to offer over 37% of their workforce, which is 47 employees out of 125 total employees, KERP payments totaling $809,162.92.

“The proposed KERP covers an unusually broad range of employees and proposes payments that are substantially high – multiple payments to each employee participant totaling one month of salary – given the market conditions the debtors’ employees would encounter should they seek alternative employment,” the committee said.

The committee also said the KERP seeks to include employees that fall within the bankruptcy code’s definition of an insider without satisfying the conditions of the bankruptcy code.

According to Wednesday’s order, in order to receive the first KERP payment, a critical employee must be employed by the debtors until Sept. 30. In order to receive the second payment, they must be employed by the debtors until Dec. 31.

Six employees will be entitled to receive only one payment, equal to the amount of the first and second payment under the KERP, if they are still employed on Dec. 31. These employees include the director of operations, the general manager of sales, the information systems manager, the assistant controller, the maintenance manager and the senior production manager.

If the debtors have not paid of their DIP loan by the time the second payment under the KERP is due, the debtors’ authority to make the second payment will be conditioned upon approval of the DIP lender and its inclusion in an approved DIP budget for that time period.

The Houston-based company provides oil company tubular goods and services. The company filed bankruptcy on May 31 under Chapter 11 case number 21-31784.

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