trending Market Intelligence /marketintelligence/en/news-insights/trending/PMjAltBblSwO-GNybMLOLg2 content esgSubNav
In This List

Another court affirms Alpha Natural's bankruptcy incentive plan


Activity Volumes Across the Equity Capital Markets Dropped Significantly in 2022


Insight Weekly: PE firms shift strategies; bank earnings kick off; bankruptcies plummet

Case Study

A Large Energy Company Manages its Exposure with Robust Tools to Assess Creditworthiness and Set Credit Limits


Insight Weekly: Stocks limp into 2023; GCC banks set for rebound; deep-sea mining faces pushback

Another court affirms Alpha Natural's bankruptcy incentive plan

A U.S. district court has affirmed a bankruptcy court rulingallowing an incentive plan designed to reward management for hitting certain targets through its reorganization.

In a memorandum opinion filed in the U.S. District for theEastern District of Virginia, the courtwrote that it found an "abundance of evidence justifying the of the bankruptcy court"and no clear error in its factual findings. Alpha's key employee incentiveplan, or KEIP, sought to incentivize senior management to meet or exceedcertain performance goals, but was contested in bankruptcy court by partiesincluding those representing benefit funds for the United Mine Workers ofAmerica.

The incentive plan was created based on goals related tocost savings, EBITDA/liquidity, safety and environmental compliance. Objectionsto the claim had contended the program was a retention plan disguised as anincentive plan.

Relying on bankruptcy court testimony, the district courtfound the objectives set for the program were "challenging, yet achievable"as Alpha is "constantly 'playing catch-up' in a falling market."

"Judge [Kevin] Huennekens found that the proposed KEIPis not a retention plan, but an incentive plan, designed to incentivize KEIPparticipants to maintain liquidity and maximize the value of the debtor'sbusiness," the affirming filing states. "Judge Huennekens noted thatwith this KEIP, the debtors have a realistic chance of successfully emergingfrom bankruptcy, but prospects will be bleak if the goals set forth in the KEIPare not met."

Alpha filed for bankruptcy in August 2015 but a deal onreorganization was recently announced.