« Lifland Rules | Main | Bad News and Bankruptcy »

Dana Redux: Bank Power!

posted by John Pottow

When Sen. Edward Kennedy (D-MA) got 503(c) into the new bankruptcy bill, I am sure he thought he was protecting rank-and-file employees from the perceived ravages of excessive corporate executive compensation.  And maybe he was.  But as someone who doesn't think KERPs are inherently evil, I was struck by Floyd Norris' insightful reporting in today's New York Times -- which I just saw Co-Blogger Lawless has posted a link to -- regarding the denial of the Dana executive compensation package under 503(c).  I will not repeat Professor Lawless's thoughtful comments, but I will add another, which may buttress his, that troubled me with the ruling.  I don't mind purposive statutory interpretation, but one must acknowledge that it can sometimes open a can of worms.  And one of the worms that has crawled out in this case is the well placed criticism that Dana's exec comp package doesn't look all that different from Calpine's, which recently got the judicial OK.  At pains to distinguish Calpine, Judge Lifland noted that the creditors there logrolled with the plan, whereas with Dana, they did not.  (For that matter, neither did Dana's shareholders, employees, nor even the US Trustee.)  But was that the basis of distinction that Congress truly wanted, if we are searching for legislative purpose -- whether the creditors said it quacked too much like a KERP?  Was according creditors another veto right in the debtor's magement affairs what Sen. Kennedy had in mind when pushing 503(c)?  I am doubtful.

Comments

As a Calpine shareholder when our ad hoc and pro se representatives (before an offical shareholder's committee was approved) pleaded the illegality of the debtor's "KERP" plan, I am outrged. I have re-read the transcript from that April 26th 2006 hearing, and believe that he has created a double standard. In the case of Dana he got it right. In the case of Calpine, he needs to now recuse himself from the case. He's obviously trying to "split the baby" by using a faulty logic in one case, and pretending that it was well reasoned, so that he can cite it in the Dana as a "here's what not to do" type of example. Maybe he's trying to get thrown off the case?

The comments to this entry are closed.

Contributors

Current Guests

Follow Us On Twitter

Like Us on Facebook

  • Like Us on Facebook

    By "Liking" us on Facebook, you will receive excerpts of our posts in your Facebook news feed. (If you change your mind, you can undo it later.) Note that this is different than "Liking" our Facebook page, although a "Like" in either place will get you Credit Slips post on your Facebook news feed.

News Feed

Categories

Bankr-L

  • As a public service, the University of Illinois College of Law operates Bankr-L, an e-mail list on which bankruptcy professionals can exchange information. Bankr-L is administered by one of the Credit Slips bloggers, Professor Robert M. Lawless of the University of Illinois. Although Bankr-L is a free service, membership is limited only to persons with a professional connection to the bankruptcy field (e.g., lawyer, accountant, academic, judge). To request a subscription on Bankr-L, click here to visit the page for the list and then click on the link for "Subscribe." After completing the information there, please also send an e-mail to Professor Lawless (rlawless@illinois.edu) with a short description of your professional connection to bankruptcy. A link to a URL with a professional bio or other identifying information would be great.

OTHER STUFF