As Brantley Hargrove extensively reported for Unfair Park over the previous two years, Energy Future Holdings, the largest electricity generator in Texas, is a mess. Facing $40 billion in debt, the company filed for Chapter 11 bankruptcy in April and is in the process of selling off one of its most valuable assets, an 80 percent stake in Oncor, the electricity delivery service. EFH was created after TPG Capital, KKR & Co. and Goldman Sachs Group Inc. exercised the largest leveraged buyout in history against what was then TXU.
As EFH has made its way through the Chapter 11 process in a Delaware federal court, it has faced strong opposition to its request to pay more than $20 million, and potentially as much as $40 million, in bonuses to executives.
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At hearing held Wednesday and Thursday, EFH presented witnesses who testified that the bonuses were not easy to earn nor were they given simply to retain executives, which bankruptcy law does not allow.
Roberta A. DeAngelis, federal bankruptcy trustee, disagrees. In her brief to the the court, DeAngelis says executives could earn bonuses by meeting business goals that were below the company's actual performance in recent years -- and EFH went bankrupt. DeAngelis says that even EFH Chairman Donald L. Evans has called the incentive targets "lay-ups."
EFH's creditors have agreed to the bonus plan; retaining the employees set to receive the bonuses ensures the stability of the company. Still, according to multiple reports, the judge in the case could still reject the bonuses to protect the Bankruptcy Abuse Prevention and Consumer Protection Act, which disallowed bonuses meant only to get employees to stick around.
The hearing is expected to start again on Wednesday.