Pace of Furniture Brands' liquidation may dent executive's bonus
Though the initial stages of Furniture Brands International’s bankruptcy moved quickly, the final stages have moved more slowly than company and court officials expected.
That may cost the corporate officer in charge of the company’s remnants some of her bonus, but it is unclear whether in the end she will get paid less.
The week after most of Furniture Brands’ assets were sold in U.S. Bankruptcy Court to KPS Capital Partners, which then formed them into Heritage Home Group, Meredith Graham was appointed “responsible officer” in charge of FBI Wind Down Inc., the remaining parts of the company that KPS did not buy. Her job is to oversee the liquidation of those remaining assets.
Graham, 41, formerly was Furniture Brands’ chief administrative officer, general counsel and corporate secretary.
As head of FBI Wind Down, she is being paid her pre-bankruptcy salary, equal to $286,000 a year, and was to receive a bonus upon a bankruptcy plan receiving final court approval and taking effect.
The bonus plan approved by the court in December said that if the bankruptcy plan took effect before April 30, Graham would receive a bonus equal to one year’s pay. If it took effect during May, she would receive a 75 percent bonus, or $214,500. If it took effect during June, she would receive 50 percent, $143,000.
The plan has not yet taken effect. A court hearing is set for July 14 to reveal whether creditors voted to accept the bankruptcy plan.
Though the June 30 deadline has been missed, FBI Wind Down filed a motion Tuesday to pay Graham a 50 percent bonus. The proposal has the support of the Official Committee of Unsecured Creditors, the motion says.
Graham also would be retained as a consultant to the company’s liquidating trust through the end of 2014 “at a reduced salary,” the motion says.
If at least 51 percent of the creditors eligible to vote on the bankruptcy plan approve it, there is expected to be no more than $72.2 million available to distribute among individuals and companies who say that Furniture Brands owed them well over $1 billion when it filed for bankruptcy protection last September.
The total cost of operating FBI Wind Down and administering the liquidation is expected to total between $14.2 million and $16.4 million. Graham’s pay is included in that total. The higher the cost of the liquidation, the less money is left to distribute to those who are still owed money by Furniture Brands.
How much of the debt the creditors could expect to be paid could range from 3.4 percent to 13.9 percent, according to tables filed in bankruptcy court, but would average from 5.2 to 7.7 percent.