Liquidating Circuit City
Stores Inc. will ask a bankruptcy judge on Wednesday to pay executives
and other employees about $4.63 million to stay with the company as it
winds down.
But it will have to do so over an objection from the U.S. trustee monitoring the bankruptcy case.
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Richmond,
Va.-based Circuit City, once the second-largest electronics retailer in
the U.S., said it needs to pay the bonuses to dissuade 154 employees
from leaving before its liquidation is complete. Circuit City said
keeping the employees would boost the company's liquidation value by
about $250 million.
U.S. Trustee W. Clarkson McDow Jr. noted in
court filings, however, that about half of the proposed payment -- $2.3
million -- is slated to go to just 16 "Tier 1" employees, including
Circuit City CEO James Marcum.
"With the passage of the Bankruptcy
Abuse Prevention and Consumer Protection Act of 2005, Congress has
expressed its intent to limit payments to management in bankruptcy
cases," McDow said in his objection. "The debtors have not demonstrated
in the motion that the payments proposed to be paid to the Tier 1 group
are appropriate."
Judge Kevin Huennekens of the U.S. Bankruptcy
Court for Eastern District of Virginia will convene a Feb. 25 hearing
to consider Circuit City's request over the U.S. trustee's objection. - John Blakeley
