Sadly, I predicted this would happen back on April 5. Just to recap, Borders submitted a restructuring plan to their bankruptcy judge that included $8.3 million in “incentives and retention bonuses” for company’s “key employees.” As I said a few weeks ago: “Bet all those laid-off clerks and store managers are really rooting for Edwards [the CEO] and the ‘key’ members of his team. Riddle me this, Batman — why exactly would a company want to retain the executives who led the company into bankruptcy, much less offer them bonuses to stay on? You and I both know that the deal will inevitably be approved and the bigwigs amply rewarded for doing a bad job of running the company.”
The judge has approved approximately $6 million in bonuses, if the company can negotiate at least $10 million in rent reductions from its various landlords. What a great deal! As one of the bankruptcy trustees said, “the bonuses were premature because Borders has only been in bankruptcy two months and hasn’t shown how it will reorganize or pay unsecured creditors.” All they’ve got to do is go to a handful of landlords and threaten to close those stores if they don’t receive a rent reduction, then *bam* the company bigwigs get their bonuses. No need to show a plan for actually, oh I don’t know, paying back their debtors or keeping the rest of their stores afloat.
Business as usual, and, sadly, with the collusion of a judge. Judge Martin Glenn ought to be ashamed of himself.