Thread regarding Avaya layoffs

Docket 946 "actively negotiating to enrich themselves"

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No Moral fiber,

Shame it used to be a Great company

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No payment of the bonuses they mentioned in the objection have been paid, they are part of the bankruptcy settlement that the judge has to approve. Note also that the unsecured group reps have come to an agreement after the plan was changed to pump up that pool.

The part that bugs me: if they're going to exit with comp, it should be equity, not cash. That is, give them "stock" in the new company.

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Thiefs

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Shocking eh!

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The terms of Mr. Kennedy’s Agreement, which is essentially a golden

parachute, provides for receipt of a minimum payment of $4.375 million in his first

year and $8.75 million over a two year period.3 The terms of Mr. Chirico’s

Agreement provides that he will earn a minimum of $6.25 million in his first year

as President and CEO and a minimum of $10 million over a two (2) year period.4

3 This equals fees of $1.9 million for each of the two years as compensation and a minimum bonus of $2.475 million for each of those two years.

The lack of any discussion in the Disclosure Statement is particularly

troubling because Mr. Kennedy and Mr. Chirico, as two of the Debtors’ most senior

executives (with Mr. Kennedy also a Board member), presumably negotiated their

own Agreements at the same time that they were negotiating the Plan and PSA on

behalf of the Debtors. Without any information as to how the terms of these

Agreements were established and approved by the Board, it appears that Mssrs.

Kennedy and Chirico were actively negotiating to enrich themselves through the

Agreements at the same time they were supposed to be acting as fiduciaries

negotiating the terms of the Plan, PSA and creditor recoveries.

Notably, the post-emergence compensation and bonuses contemplated in the

Agreements total $10,625,000 in year one, which is roughly forty percent (40%) of

the entire $25 million General Unsecured Recovery Pool. For the two year period,

the compensation and bonuses total $18,750,000, or approximately seventy five

percent (75%) of the General Unsecured Recovery Pool, which is projected to pay

creditors just eight percent (8%) of their allowed claims.5 If the Debtors posit that

these facts do not create a conflict of interest, the Disclosure Statement should set

forth their rationale and legal basis for this conclusion.

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Trustee is either doing the job or going through the motions. The bonuses where slammed but still paid.

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