Bankruptcy Watchdog Objects to Green Field Energy Bonuses

   By Tom Corrigan 
 

The government bankruptcy watchdog overseeing Green Field Energy Services Inc.'s restructuring is objecting to the company's proposed employee bonuses, advising the court to intervene.

In court documents filed Tuesday, U.S. Trustee Roberta A. DeAngelis said the bonus plan--notable details of which, including the amount, have been redacted--was structured to entice employees to remain with the company through its bankruptcy instead of rewarding them for performance. Retention bonuses are generally illegal for high-level employees, whose bonuses in bankruptcy must be tied to challenging goals meant to achieve a successful restructuring.

"Despite the label of the bonus plan, the bonus plan is structured to entice the debtors' insiders to stay with the companies and do their jobs through the conclusion of the restructuring process, rather than entice the insiders to perform at a high level to achieve significant benchmarks," she said.

Bonuses paid during bankruptcy are not uncommon, though they are subject to regulations and have faced increasing opposition from the Justice Department's bankruptcy watchdogs in recent years.

Ms. DeAngelis filed a separate objection to Green Field's motion to keep information about the company's bonuses under seal, which means relevant information--such as which employees would receive bonuses and the criteria for calculating those bonuses--could permanently be shielded from public view.

Ms. DeAngelis was provided with an unredacted copy of the bonus plan, a redacted version of which Green Field filed with the bankruptcy court on Dec. 17.

Green Field, which supplies equipment used by the oil and natural gas industry, is currently exploring opportunities to sell its assets as part of its Chapter 11 restructuring efforts.

The Louisiana-based equipment supplier said it plans to put its assets on the auction block under the supervision of Judge Kevin Gross of the U.S. Bankruptcy Court in Wilmington, Del.

Green Field, which filed for Chapter 11 protection in October, blamed its financial difficulties on the significant amount of debt it took on to finance a shift toward natural gas in 2010 as that sector appeared to present an opportunity for growth.

At the time of its bankruptcy filing, Green Field had $255.9 million in bond debt, an $80 million credit facility owed to Shell and $98.6 million in trade debt.

The company was formed in 1969 and changed its name to Green Filed Energy Services Inc. in 2011. Green Field is based in Lafayette, La., and employs 355 people at 14 facilities throughout Texas and Louisiana.

--Stephanie Gleason contributed to this article.

(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection. Go to http://dbr.dowjones.com)

Write to Tom Corrigan at [e-mail]

Subscribe to WSJ: http://online.wsj.com?mod=djnwires