Despite a disastrous year for defunct car-charging company Ecotality, which went bankrupt only a few years after winning a $100 million federal grant, two high-level employees soon stand to receive hefty retention bonus payments even though the company has no future.
Company lawyers say they need to pay the bonuses to make sure the two stick around during the dim final days as the company finalizes the transfer of its assets. A federal bankruptcy court in Arizona approved the bonus plan despite objections from creditors and government lawyers — though the judge capped the total at the $125,000 sought by the company.
Still, the fact that lawyers are quibbling on how to spend $125,000 marks just how fast and far Ecotality has fallen since 2009 when it won a $100 million grant from the Department of Energy.
In the end, various successful bidders offered a total of about $4.4 million for the company’s remaining assets, court records show.
Ecotality has seen its workforce drop to just four employees, but company lawyers say they still must complete an audit of a 401K plan, fill out tax returns, liquidate assets and complete other important tasks.
“The debtors believe that further attrition among their remaining employees will leave them unable to meet even the most basic of their obligations without incurring substantial expenses” by hiring replacement workers, Ecotality bankruptcy lawyers argued in court papers.
Lawyers said they believed that the two unidentified employees would quit if they didn’t get more money.
But a creditors committee and the Office of the Trustee, an arm of the Justice Department that monitors bankruptcy proceedings, separately filed court papers opposing the bonus plan. Both noted that an even earlier incentive plan had already been rejected during bankruptcy.
Elizabeth Amorosi, assistant U.S. trustee, argued in one motion that it’s not clear where the money from the bonuses would come from because Ecotality isn’t operating anymore.
“The sales netted little real cash to the estates and significant administrative expenses have been and continue to be incurred and paid,” she wrote in a court filing.
Lawyers for a creditors committee argued in a separate motion that the retention plan was an “unnecessary and expensive expenditure” by a bankrupt company with little left to distribute to unsecured creditors.
According to creditors, the bonus plan would equal the two employees’ regular salaries from Dec. 1 to the end of February 2014 plus one week of salary for each week worked.
“This proposal is unconscionable,” creditors’ lawyers argued in a pleading.
Nonetheless, Bankruptcy Judge Randolph Haines signed off on the plan on Dec. 23, ruling the it was best interests of Ecotality’s estates and creditors.
Ecotality’s collapse has drawn comparisons to Solyndra, the bankrupt California solar panel maker that shut down while owing taxpayers more than $500 million in federal loans.