Malden Mills drops bonus plan
Court trustee and creditors call $1m payout excessive
WORCESTER -- Malden Mills Industries Inc. has dropped its effort to win bankruptcy court approval for nearly $1 million in bonuses to reward five executives of the textile maker in its Chapter 11 case.
The incentive plan had drawn objections from a bankruptcy trustee and some creditors who stand to lose money in the bankruptcy. They called the bonuses excessive.
On Monday, the company withdrew the incentive plan before Judge Joel B. Rosenthal in US Bankruptcy Court in Worcester, where the case was transferred from bankruptcy court in Delaware. Malden Mills modified its original incentive proposal filed Jan. 10 by limiting eligibility for bonuses to five executives and leaving out company directors.
Chief executive Michael Spillane, who stood to receive a $312,244 bonus under the original proposal, yesterday said Malden Mills withdrew the proposal because it had become "a distraction" in the overall bankruptcy and the company's plans for a fresh start under new ownership.
"I think it just started to take on a life of its own," Spillane said. "It took away from the end mission."
Lawrence-based Malden Mills had proposed rewarding Spillane and four other executives with bonuses totaling $990,000, provided they succeed in selling the company for $35 million to $45 million. The bonuses were proposed as incentives to retain the executives and maximize the sale price.
Before seeking bankruptcy protection, Malden Mills agreed to be purchased by Boston-based Gordon Brothers Group for $44 million. Another bidder, Philadelphia-based Chrysalis Capital Partners, emerged during bankruptcy proceedings, and the court can consider any additional bids that come in before a Feb. 15 deadline.
Malden Mills' bankruptcy came just over three years after the privately held maker of Polartec fleece and other specialty fabrics emerged from an earlier Chapter 11 filing.
Malden Mills emerged from its earlier bankruptcy in 2003 with lenders in control of the company, ending three generations of leadership under the Feuerstein family. Aaron Feuerstein gained national renown for his decision to keep workers on payroll after a 1995 fire destroyed the company's main factory.
The company has more than 800 workers at plants in Lawrence and Hudson, N.H. Customers include Lands' End, North Face, Patagonia, and the Pentagon.