HOUSTON --A bankruptcy court began a hearing on Tuesday to decide whether $2m (?.3m) in pay bonuses should be awarded to the senior managers at Wellman, a bankrupt US producer of polyethylene terephthalate (PET).
Wellman proposed the bonuses, saying they would discourage its eight senior managers from abandoning the bankrupt company. Wellman is under a tight 15 August deadline to either sell itself or successfully reorganise, the company said in court documents.
The current bidders for Wellman's assets are all strategic buyers who will likely shut down some - if not all - of the company's plants, according to court documents.
The bidders include DAK Americas, Mossi & Ghisolfi and Reliance Industries, according to market sources.
One source named DAK as the favoured buyer.
Wellman plans to choose a bidder by 22 April, it said in court documents. The company would then solicit higher offers in an auction to be held in early July.
Any deal would close by the 15 August deadline, the company said. A sale could be worth $350m.
"The requirement that Wellman be sold or reorganised as a going concern within the next four months places a tremendous burden on Wellman s senior managers," the company said in court documents.
"It is only natural for the senior managers to focus at least some of their time and energy on protecting themselves and their families in the event they lose their jobs," Wellman said.
If the company loses its senior managers, then its value could drop, Wellman said.
Already, lower-level executives have left the company, including an accounting manager, a tax manager and an internal auditor, the company said.
Under the proposal, the senior managers would receive a total of $2m in bonuses when either a sale closes or when a reorganisation plan is confirmed, according to court documents.
Other lower-level managers would receive an additional $700,000 in bonuses, the company said.
Managers could receive additional bonuses if the sale closes above $350m, Wellman said.
One unnamed Wellman employee sent a letter to the court objecting to the proposed bonuses.
"As a long-term employee of Wellman, I am concerned and embarrassed that my company would propose such a plan," he wrote.
"Wellman is in this situation due in part to poor business and financial decisions by the leaders who would benefit from this plan," the employee wrote. "To consider offering bonuses for this behaviour is incomprehensible to me."
Wellman proposed the bonuses, saying they would discourage its eight senior managers from abandoning the bankrupt company. Wellman is under a tight 15 August deadline to either sell itself or successfully reorganise, the company said in court documents.
The current bidders for Wellman's assets are all strategic buyers who will likely shut down some - if not all - of the company's plants, according to court documents.
The bidders include DAK Americas, Mossi & Ghisolfi and Reliance Industries, according to market sources.
One source named DAK as the favoured buyer.
Wellman plans to choose a bidder by 22 April, it said in court documents. The company would then solicit higher offers in an auction to be held in early July.
Any deal would close by the 15 August deadline, the company said. A sale could be worth $350m.
"The requirement that Wellman be sold or reorganised as a going concern within the next four months places a tremendous burden on Wellman s senior managers," the company said in court documents.
"It is only natural for the senior managers to focus at least some of their time and energy on protecting themselves and their families in the event they lose their jobs," Wellman said.
If the company loses its senior managers, then its value could drop, Wellman said.
Already, lower-level executives have left the company, including an accounting manager, a tax manager and an internal auditor, the company said.
Under the proposal, the senior managers would receive a total of $2m in bonuses when either a sale closes or when a reorganisation plan is confirmed, according to court documents.
Other lower-level managers would receive an additional $700,000 in bonuses, the company said.
Managers could receive additional bonuses if the sale closes above $350m, Wellman said.
One unnamed Wellman employee sent a letter to the court objecting to the proposed bonuses.
"As a long-term employee of Wellman, I am concerned and embarrassed that my company would propose such a plan," he wrote.
"Wellman is in this situation due in part to poor business and financial decisions by the leaders who would benefit from this plan," the employee wrote. "To consider offering bonuses for this behaviour is incomprehensible to me."
