In re Hawker Beechcraft, Inc.
United States Bankruptcy Court for the Southern District of New York
479 B.R. 308 (2012)
Airplane manufacturer Hawker Beechcraft (debtor), pursuing both a debt-restructuring plan and a third-party sale in Chapter 11, sought approval of a Key Employee Incentive Plan (KEIP) that would pay its senior leadership bonuses up to 200 percent of salary if either transaction closed, scaled to timing or price; the bankruptcy court approved a separate, non-insider retention plan from the bench but reserved judgment on the KEIP.
Is a Chapter 11 reorganization plan that pays incentives to the debtor's insiders scrutinized as a retention plan under § 503(c)(1) of the Bankruptcy Code if the plan does not require insiders to earn the incentive by meeting challenging goals?