3 months prior to it submittedapplied for bankruptcy, Montvale-based AP established a $6 million trust account to make sure it might continue to pay its top executives throughout the bankruptcy proceedings, according to court files.
That multi-million-dollar trust account has actually ended up being an issue in the business request for approval of an extra $5 million in retention pay for executives and store supervisors. A hearing on the retention pay request is scheduled for Friday before US Bankruptcy Judge Robert Drain.
The Great Atlantic Pacific Tea Company (AP) submitteddeclared bankruptcy July 19. The company intends to offer mostthe majority of its stores and leave the grocery store business.
AP asks court to OK $5 million in retention pay for executives, supervisors
Financial documentations filed by AP with the bankruptcy court reveal that of the $6 million, the company set aside $2.5 million in trust for one unnamed director and made two $1.5 million trust contributions for individuals identified just as current policemans. A spokesperson for AP said Wednesday the company is not divulging the identity of those individuals.
The request for incentive pay and the discoveries about the $6 million trust account come as employees at some AP-owned stores, consisting of 2 Pathmarks in Clifton, are being laid off and receiving just 52 percent of their eligible discontinuance wage, as the outcome of a bankruptcy court ruling. The Pathmark workers in Clifton also are barred from bumping or replacing less-senior store employees due to the fact that of another judgment related to the bankruptcy.
While union-represented employees are getting only 52 percent of their severance pay and have actually lost bumping rights due to those rulings, some executives and managers will be receiving almost half of their salary to work in between one and 3 months, an objection submitted by the United Food and Commercial Employees International Union states.
Judge lets AP limitation seniority bumping; unions provided greater severance
APs request for retention pay for executives and managers is outrageous, mentions a short by 1199SEIU United Health care Workers East, which represents 375 Pathmark workers, another union objecting to the demand.
Kenneth Harrington, a federal bankruptcy trustee, likewise has filed a motion opposing APs demand.
AP, in submitting the demand for the $5 million in retention pay on Aug. 25, argued that it needshas to pay rewards to top workers to keep them on the job throughout the sales of the shops and the bankruptcy process. AP stated that lost 54 high-level staff members after filing for bankruptcy.
The retention incentives would go to 495 workers, 83 of them business staff members and 412 of them field-level non-union employees, such as store supervisors.
Trustee Harrington, in his objection, said AP, by not identifying the 83 business companies, or offering more details about their tasks, didnt satisfy the requirement of the law that it should prove that those getting retention pay are not business experts. Usually, Harrington argued, policemans of the business are thought about experts.
Among the objecting unions, 1199SEIU United Health care Employee East, noted that Congress and the courts have acted in the past to prevent unjust payments to executives in a bankruptcy proceeding. The union cited a court decision in the US Airways Inc. bankruptcy case that found that retention payments too commonly have actually been used to lavishly reward – at the expenditure of the lender body – the very executives whose bad choices or absence of foresight were accountable for the debtors monetary predicament.
AP, in financial declarations accompanying its bankruptcy filing, detailed an overall of over $13 million in payments to business directors and executives throughout the 12 months prior to the bankruptcy filing, including consulting fees to one director of as high as $100,000, along with month-to-month vehicle allowances averaging $700 for several policemans, monthly cell phone allowances, cost account reimbursements of as high as $7,161, and incentive payments to 2 executives, one for $400,000, and the second in the amount of $100,000.