Ñourt filings: Bankrupt Philadelphia refiner seeks at least $2.5 million in executive bonuses
New York. The bankrupt Philadelphia Energy Solutions Inc oil refiner is seeking a minimum of $2.5 million in bonus payments to its top executives as part of a plan to reorganize or sell the company, U.S. bankruptcy court filings show.
That would represent a potential second round of bonuses for PES executives, who were already paid roughly $4.5 million in retention awards after a massive June fire that resulted in the plant’s shutdown. PES laid off hundreds of workers without severance pay or benefits following the blaze.
The latest set of bonuses would be paid if PES confirms a reorganization within 15 months of its July Chapter 11 bankruptcy filing, according to documents with the U.S. Bankruptcy Court for the District of Delaware on Friday.
The $2.5 million could also be paid if PES secures at least $300 million in net proceeds from a sale, insurance proceeds or other payments, the documents show,told Reuters.
Under the plan, Chief Executive Officer Mark Smith would receive 29% of any incentive bonuses, PES board of directors Chairman Mark Cox would get 25%, Chief Financial Officer Rachel Celiberti 18% and attorney Anthony Lagreca 14%. Three other employees would receive smaller amounts.
The executives are needed to oversee the bankruptcy and sale process, seek insurance proceeds and manage idling the plant, among other work, the court filings said, with attorneys noting those duties “go well beyond the demands of their day-to-day jobs.” The company was not available for comment.
United Steelworkers International, the union whose 640 local members worked at PES, plans to object to the bonus plan. “The thought that they need millions of dollars of new bonuses to work diligently towards a sale of the refinery is offensive,” USW President Thomas Conway said.
PES entered bankruptcy on July 21 and shut its last crude distillation unit later that month. The refinery has since been put up for sale and has attracted interest from parties ranging from biofuels producers to real estate developers. Bonus payments to the executives would increase by 2.5% on every dollar above the $300 million in net proceeds minus expenses, Reuters. If the proceeds hit $1 billion, bonuses would jump seven-fold. Smith would get a $725,000 payment under the minimum amount and $5.8 million if the net proceeds hit $1 billion.
The refiner is fighting for as much as $1.25 billion in insurance proceeds for damage and business interruption linked to the June incident.