P'tex creditors to have their day in court
September 12, 2003-- Home Textiles Today,
Wilmington, DE — A federal bankruptcy court judge this afternoon will hear arguments challenging Pillowtex's proposals to pay bonuses to some remaining employees and to its consulting agreement with CreditSuisse First Boston.
The creditors and union are challenging Pillowtex's agreement and fee structure with CS First Boston, which is consulting in the liquidation and sell-off of the company's assets. Under the arrangement CSFB is being paid $150,000 a month, and upon sale of the company's assets it is to receive either 1 percent of the sale price or $2 million, whichever is greater. Those are amounts that the opposing attorneys argue is just too much.
The judge will also hear arguments about Pillowtex's Key Employee Retention Program, which is structured to provide severance payments and retention bonuses to 143 employees — with 29 of that group receiving additional performance and ''variable'' bonuses for up to two years.
The terms and structure of the KERP are under challenge by the company's creditors' committee and its union, UNITE.
Additionally, the Charlotte Observer newspaper is challenging the redaction of the employees' names and efforts to file the plan under seal.