Court Focuses on Policy Rather Than Formality in Approving Key Emplo...

American Bankruptcy Institute Law Review Staff

 

 

Rejecting the technical arguments of the United States Trustee (the “UST”), the Bankruptcy Court focused on the policies behind the restrictions on employee retention plans to approve the debtor’s key employee incentive plan (“KEIP”) in In re Velo Holdings[1].  The Velo Holdings Court approved the KEIP because it was incentive-based rather than retentive-based and was a valid exercise of the debtor’s sound business judgment.[2]