A U.S. bankruptcy judge has approved Energy Future Holdings’ plan to award $20 million in bonuses to top executives despite objections from the federal bankruptcy advocate’s office.
At a hearing in Wilmington, Del., on Wednesday, Judge Christopher Sontchi said the bonus program met legal standards because it incentivized performance and was not designed solely to keep executives from leaving the company.
“After applying the most stringent test. … I find each plan easily and overwhelmingly meets the standard,” Sontchi said. “It is not a close call.”
EFH, the former TXU Corp., filed for bankruptcy in April, seven years after it was taken private for $45 billion, the largest leveraged buyout in U.S. history.
Creditors, including some of Wall Street’s most powerful financial firms, are fighting for control of EFH subsidiaries Luminant, Oncor and TXU Energy.
Creditors raised no objection to the compensation plan, which applies to 26 executives and could run a price tag of $40 million. But earlier this month, the U.S. Trustee’s Office filed to stop the payouts, calling them “pay-to-stay payments.”
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