The U.S. Trustee overseeing the Celsius chapter 11 bankruptcy case, William Harrington, has objected to a Celsius motion that would see 62 of its 275 employees paid a retention bonus totaling $2.96 million.
The Trustee has blasted Celsius in its supporting statement for the objection filed on Oct. 27, noting:
“It defies logic, not to mention the Bankruptcy Code, that a company where the majority of its functions are no longer providing services, would now propose a multi-million dollar bonus scheme.”
For the “bonus motion”, as it is aptly named, to receive approval, the Trustee claims that Celsius must show that the bonuses are reasonable based on the facts of the case. Without any identifiable metrics, the Trustee says Celsius has failed to do so.
While the objection does not infer that Celsius employees are not deserving of an essential employee retention program (KERP), it points to the information provided by Celsius as being insufficient to justify such a high amount.
KERPs are designed to motivate employees to advance a successful restructuring outcome. While adding to executive pay ahead of a potential restructuring may seem counterintuitive, it can often be in the best interest of stakeholders.
Related: Quebec Pension Fund loses almost entirety of its Celsius investment in less than ten months
Unlike the personal information of Celsius creditors, details of the KERP recipients have been kept out of the public eye, with an unredacted breakdown provided only to the court, the Official Committee of Unsecured Creditors, and the Trustee.
The Trustee has taken issue with that as well, claiming other interested parties are unable to argue whether the participants could be considered insiders, which would render them ineligible for a KERP.
Celsius had filed the bonus motion on Oct. 11, with a hearing on the proposal and related relief set to take place on Nov. 1.
Meanwhile, the lender is also being blamed for causing financial distress at Bitcoin (BTC) miner Core Scientific, who claimed on Oct. 19 that Celsius has refused to pay its bills since it filed for chapter 11 bankruptcy on Jul. 13, resulting in Core Scientific losing approximately $53,000 per day.