U.S. Trustee Objects to Linens ‘N Things Severance Plan
Acting U.S. Trustee Roberta A. DeAngelis objected to Linens ‘n Things Inc.’s motion for approval of a severance plan for certain noninsider store-level employees, arguing that it lacks adequate details and that the debtors have not acknowledged relevant legal precedent on severance pay, Bankruptcy Law360 reported yesterday. The debtors did not attach a copy of the severance plan to the motion, or include information about the identity of the specific individuals the plan would cover, the participants’ respective salaries, the length of their tenure with the company, or whether the participants are covered under any other bonus programs, the trustee contends. In addition to failing to provide enough information to properly evaluate the plan, the objection said that the debtors aren’t acknowledging the new limitations imposed by the Bankruptcy Code, or controlling Third Circuit law that bars or limits the debtors from paying employees severance as an administrative expense based on a length-of-service calculation, where the work that forms the basis of the payment occurred prepetition.

