Proterra’s employee retention plan draws U.S. trustee objection

By Sarah Lizee

Olympia, Wash., Sept. 25 – Proterra Inc.’s motion seeking approval of a key employee retention plan drew an objection from Regions 3 and 9 U.S. trustee Andrew R. Vara, according to documents filed Friday with the U.S. Bankruptcy Court for the District of Delaware.

Vara said several of the KERP participants have officer, director and manager titles and, therefore, are presumptive insiders for which the bankruptcy code prohibits retention bonuses absent specific findings identified in the bankruptcy code.

“The debtor bears the burden of proof to establish that these presumptive insiders should not be treated as insiders, and the motion fails to meet this burden,” the U.S. trustee said in the objection.

Also, the KERP is intended to incentivize the participants to remain employed by the debtors for a period of six or 12 months, but the debtors seek authority to make KERP payments immediately upon approval of the KERP, subject to clawback if the participant leaves prior to their designated retention period.

“Retention bonuses should only be paid after the employee has satisfied the retention condition,” Vara said.

The debtors also seek authority to remove KERP participants, add additional participants, and reallocate payments between existing or additional participants, without a further motion, notice, opportunity to object or court order.

Vara said all payments must be approved by the court after notice and hearing, according to bankruptcy code.

Burlingame, Calif.-based Proterra designs and manufactures zero-emission electric transit vehicles and EV technology solutions for commercial applications. The company filed bankruptcy on Aug. 7 under Chapter 11 case number 23-11120.

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