Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

The Bankruptcy StrategistKickerFeaturesTopicsCommercial LawSectionsNewsLJN Newsletters

Key Employee Retention under BAPCPA

By Douglas P. Bartner and Lynette C. Kelly
January 29, 2008

In 2005, Congress purported to address the hot-button issue of executive compensation in bankruptcy by severely limiting Key Employee Retention Programs ('KERPs') that were then common in reorganization cases. These limitations on KERPs were set forth in Bankruptcy Code ' 503(c), added by the Bankruptcy Abuse and Consumer Protection Act of 2005 (the 'Act'). Although billed as a response to recent abuses of the bankruptcy system by executives of corporate giants like Enron Corporation, the amendment as drafted applied absent any Enron-type fraud or mismanagement, prompting concern that it would impede successful reorganizations by preventing necessary retention payments to debtors' executives. As post-Act case law shows, the Act in practice has not had the dramatic effect on executive compensation in bankruptcy that was perhaps intended. This is good news, however, for companies facing reorganization, which need to provide appropriate compensation to their employees in order to negotiate the difficult terrain of Chapter 11 and emerge successfully.

Background: Pre-Act Use of KERPs

This premium content is locked for Entertainment Law & Finance subscribers only

  • Stay current on the latest information, rulings, regulations, and trends
  • Includes practical, must-have information on copyrights, royalties, AI, and more
  • Tap into expert guidance from top entertainment lawyers and experts

For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473

Read These Next
Law Firms are Reducing Redundant Real Estate by Bringing Support Services Back to the Office Image

A trend analysis of the benefits and challenges of bringing back administrative, word processing and billing services to law offices.

Bankruptcy Sales: Finding a Diamond In the Rough Image

There is no efficient market for the sale of bankruptcy assets. Inefficient markets yield a transactional drag, potentially dampening the ability of debtors and trustees to maximize value for creditors. This article identifies ways in which investors may more easily discover bankruptcy asset sales.

Bit Parts Image

Summary Judgment Denied Defendant in Declaratory Action by Producer of To Kill a Mockingbird Broadway Play Seeking Amateur Theatrical Rights

Risks of “Baseball Arbitration” in Resolving Real Estate Disputes Image

“Baseball arbitration” refers to the process used in Major League Baseball in which if an eligible player's representative and the club ownership cannot reach a compensation agreement through negotiation, each party enters a final submission and during a formal hearing each side — player and management — presents its case and then the designated panel of arbitrators chooses one of the salary bids with no other result being allowed. This method has become increasingly popular even beyond the sport of baseball.

Disconnect Between In-House and Outside Counsel Image

'Disconnect Between In-House and Outside Counsel is a continuation of the discussion of client expectations and the disconnect that often occurs. And although the outside attorneys should be pursuing how inside-counsel actually think, inside counsel should make an effort to impart this information without waiting to be asked.