A federal judge overseeing Furniture Brands International’s Chapter 11 bankruptcy on Friday approved the company’s request to pay bonuses to unnamed executives if certain financial targets are met during the process.
Last week, a bankruptcy trustee objected to the bonuses, saying they were unwarranted, given the company’s underfunded pension obligation topping $200 million.
But Judge Christopher Sontchi of the U.S. Bankruptcy Court of Delaware capped the bonuses at $3.5 million. The money would go to seven unnamed senior management employees.
Also, he approved up to $2.1 million in retention bonuses to 48 key employees, who also were not named.
Furniture Brands said withholding the names was to “preserve company morale” and to protect the privacy of the employees.
Sontchi said the bonuses and incentive pay were “justified by the facts and circumstances of the cases and in the best interests of the debtors, their estates and all other parties of interest.”
Sontchi also approved a $144.5 million bankruptcy loan to Furniture Brands.
KPS Capital Partners replaced Oaktree Capital Management as the stalking horse bidder for Furniture Brands assets, including Lane. KPS has offered $280 million.
The bankruptcy auction is scheduled for Dec. 10.