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RadioShack's proposal to pay seven of its top executives up to $1.4 million in bonuses is facing some opposition, MarketWatch.com reported yesterday. The retailer's unsecured creditors filed court papers on Tuesday saying that the bonuses are "really disguised as a retention plan," which violates the bankruptcy code. The bankruptcy watchdog overseeing the case voiced similar concerns as the creditors, adding that the financial thresholds the executives must meet to receive the payouts aren't clear. In late March, RadioShack filed court papers seeking approval to dole out up to $1.4 million to the seven executives, who are considered "critical, irreplaceable employees." Court papers say that the amount of the payments will depend upon how much creditors recover at the conclusion of the chapter 11 case. RadioShack, which filed for bankruptcy protection last month, is closing many of its stores but still holds out hope of finding a buyer or investor to help it survive on a smaller scale. U.S. Trustee <b>Andrew Vara</b> is seeking more information on how the bonus payout will be calculated. Similarly, unsecured creditors say the incentives rely "on a single metric that requires no real effort to achieve."

Bankruptcy lawyers breathed a sigh of relief when Justice Stephen G. Breyer issued a relatively narrow opinion in Czyzewski v. Jevic Holding Corp. But after a few weeks of reflection, Prof. Stephen Lubben wonders if The decision didn’t lay the groundwork for years of future litigation, according to Lubben’s commentary in the New York Times DealBook blog on Friday. The Supreme Court held that when a bankruptcy court orders a chapter 11 case dismissed, it can’t also order the distribution of the debtor’s assets in a way that contradicts the order of payment via the “absolute priority rule” in a bankruptcy liquidation. The court went out of its way to avoid saying anything definitive about all the other times priority is violated in a chapter 11 case. In reaching this conclusion, Justice Breyer distinguishes most of the other priority violations as interim distributions, which might plausibly make most creditors better off in the long run. He contrasts these with final distributions, like those at work in Jevic, that decide creditors’ recovery rights once and for all.