Executives At Bankrupt Sports Authority Ask For Bonuses, Get Denied
"I think it’s just inappropriate to pay senior executives a bonus when all the employees are losing their jobs," the judge said.
Tom Hals
LOADINGERROR LOADING
WILMINGTON, Del. (Reuters) - A U.S. bankruptcy judge refused on Tuesday to allow Sports Authority to pay up to $2.85 million in bonuses to four executives for overseeing the winding down of the national sporting goods chain.
Englewood, Colorado-based Sports Authority filed for bankruptcy in March with hopes of keeping some of its 464 stores open, but battles among lenders and suppliers eventually scuttled those plans. Its final stores closed last month.
Advertisement
“I think it’s just inappropriate to pay senior executives a bonus when all the employees are losing their jobs,” said Judge Mary Walrath during a hearing in Wilmington, Delaware.
Sports Authority said the bonuses were essential to ensure executives squeeze the most value out of its assets by adhering to a budget and preventing waste.
The company asked to keep the identities of the executives under seal to “minimize detrimental impacts on employee morale,” which prompted an outcry from some of the 14,000 former staffers.
“I’m not surprised the employees are sending angry emails about it,” said Walrath.
Advertisement
Bankrupt companies often get court approval to make special bonus payments to top executives for hitting performance targets designed to maximize value for creditors.
The payments are routinely opposed by the U.S. Trustee, which is the government’s bankruptcy watchdog, and by unions, particularly when aspects of the bonus programs are filed under seal.
Last year, judges rejected bonus plans from both Molycorp Inc, a producer of rare earth materials, and GT Advanced Technologies Inc, which developed mobile device screens for Apple Inc.
Also on Tuesday, Walrath approved a settlement among Sports Authority, its lenders and creditors over the division of the remaining cash and legal claims.
Under the deal, landlords would get most of their unpaid rent that accrued during the bankruptcy, and the lenders would give up claims they could have pursued against suppliers and other unsecured creditors.
Advertisement
Unsecured creditors agreed to drop their request to convert the case to a Chapter 7 liquidation.
The largest U.S. sporting goods retailer, Dick’s Sporting Goods Inc, acquired the SportsAuthority name and other intellectual property at a June auction.
(Reporting by Tom Hals in Wilmington, Delaware; Editing by Lisa Von Ahn)
Support HuffPost
Our 2024 Coverage Needs You
Your Loyalty Means The World To Us
At HuffPost, we believe that everyone needs high-quality journalism, but we understand that not everyone can afford to pay for expensive news subscriptions. That is why we are committed to providing deeply reported, carefully fact-checked news that is freely accessible to everyone.
Whether you come to HuffPost for updates on the 2024 presidential race, hard-hitting investigations into critical issues facing our country today, or trending stories that make you laugh, we appreciate you. The truth is, news costs money to produce, and we are proud that we have never put our stories behind an expensive paywall.
As Americans head to the polls in 2024, the very future of our country is at stake. At HuffPost, we believe that a free press is critical to creating well-informed voters. That's why our journalism is free for everyone, even though other newsrooms retreat behind expensive paywalls.
Our journalists will continue to cover the twists and turns during this historic presidential election. With your help, we'll bring you hard-hitting investigations, well-researched analysis and timely takes you can't find elsewhere. Reporting in this current political climate is a responsibility we do not take lightly, and we thank you for your support.
Thank you for your past contribution to HuffPost. We are sincerely grateful for readers like you who help us ensure that we can keep our journalism free for everyone.
The stakes are high this year, and our 2024 coverage could use continued support. Would you consider becoming a regular HuffPost contributor?
Dear HuffPost Reader
Thank you for your past contribution to HuffPost. We are sincerely grateful for readers like you who help us ensure that we can keep our journalism free for everyone.
The stakes are high this year, and our 2024 coverage could use continued support. If circumstances have changed since you last contributed, we hope you’ll consider contributing to HuffPost once more.