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In re Hawker Beechcraft, Inc.

United States Bankruptcy Court, S.D. New York (2012) | 479 B.R. 308; 68 Collier Bankr. Cas. 2d 510; 2012 Bankr. LEXIS 3899; 56 Bankr. Ct. Dec. (CRR) 259; 2012 WL 3637251

4 min read

TL;DR: A bankruptcy court rejected a debtor's executive bonus plan, finding it was a disguised retention plan for insiders. The plan's performance targets were too easy to achieve, failing the strict test for such payments under the Bankruptcy Code.

Legal Significance: This case establishes a critical test for distinguishing true incentive plans from disguised retention plans under 11 U.S.C. § 503(c). It holds that if a plan's minimum performance targets are not sufficiently challenging, the entire plan is treated as a retention plan.