Judge Kevin Gross of the U.S. Bankruptcy Court in Wilmington, Del., approved bankrupt Green Field Energy Services' employee bonus and retention plans, saying in a Jan. 13 ruling that the plans are "in the best interests of the Debtors' estates, its creditors, and other parties in interest." Gross issued the ruling over the objection of the government's watchdog, U.S. Trustee Roberta A. DeAngelis (pictured above).
Lafayette businessman Mike Moreno's Green Field Energy Services filed for Chapter 11 bankruptcy protection Oct. 23 and told the court on Dec. 17 that it wanted to pay incentive and retention bonuses to its employees.
That plan, filed in U.S. bankruptcy court in Delaware, did not sit well with DeAngelis, who said in court documents that the bonus plan is more about keeping the employees from jumping ship, rather than rewarding them for job performance. Retention bonuses for high-level employees are typically illegal in bankruptcy; they must be tied to challenging goals that require officers to perform at a high level so that the company can successfully restructure. Even then, such bonuses are being more closely scrutinized by the courts.
Green Field and its affiliated entities, Hub City Tools and Proppant One, all of which list their mailing address as 4023 Ambassador Caffery Parkway, Suite #200, in Lafayette, also filed a December motion to seal the bonus plan. While details of the plan - including job description, reporting relationship and the award amount each insider participant would be entitled to receive - were redacted in the court filing, the debtors did provide the list to the trustee on a confidential basis.
DeAngelis filed a separate objection to the seal, but Judge Gross also signed off on the seal motion.
As ABiz reported Dec. 19, Green Field is planning to sell its assets at a bankruptcy auction, and Gross apparently believes the bonus plan, which is tied to certain monetary thresholds established for the asset sale, is a key component of the restructuring plan.
Green Field, the first company to run its hydraulic fracturing equipment on natural gas, also provides cementing, coiled tubing, pressure pumping, acidizing and other pumping services.
"All incentive programs have some degree of retention, and certainly that's the case here," Gross said, according to the Wall Street Journal. "The fact is, they're necessary."
Mike Moreno's bankrupt Green Field Energy Services, which billed itself "a leader in using natural gas to power turbine driven hydraulic fracturing and drilling equipment," got court approval to pay employees bonuses to stay on board during its reorganization.
Green Field has come up with a restructuring support agreement it says would settle a number of disputes involving its largest customer, Royal Dutch Shell PLC, bondholders and its chairman and CEO, Moreno. Under the terms of the proposed agreement, Shell would receive a percentage of the asset sale, plus $5 million of the company's cash and a so-called turnover distribution capped at $40 million, The Wall Street Journal reports. The newspaper notes that bondholders owed about $256 million will get stock in a reorganized company named NewCo, and Moreno would get equity in NewCo in return for his contribution of his stake in Turbine Generation Services, formerly Green Field Power Generation, to the new company.
Green Field's official committee of unsecured creditors, which was not involved in devising the restructuring plan, wants the agreement probed, and on Jan. 13 Gross granted the committee's request to appoint an examiner, an independent outsider who will investigate the restructuring support agreement. At the hearing, reports the WSJ, a lawyer for the committee took issue with many of the agreement's terms and how it would affect unsecured creditors.
Green Field's lawyers asked that the judge limit the scope of the examination to control expenses and avoid delaying confirmation of the proposed plan, the newspaper reported.
At the time of its bankruptcy filing, Green Field employed 355 people at 14 facilities throughout Texas and Louisiana. It's unclear how many it employs today.