Judge rubber-stamped bonuses for RG Steel execs
Here’s a judge who doesn’t waste time penning his own decisions.
Last night’s three-page order by U.S. Bankruptcy Judge Kevin J. Carey – authorizing up to $20 million in bonuses to 10 executives of RG Steel, owner of Sparrows Point – was drafted and submitted to the judge by the bankrupt company’s lawyers.
JUDGE KEVIN J. CAREY
All Judge Carey did was sign his name and date the document, while a clerk, in a handwritten note, appended a minor concession to unsecured creditors following a hearing yesterday in his Delaware courtroom.
An additional 13 pages of documents – submitted by RG Steel to stipulate the details of the executive bonus plan – were approved by Carey without any modification at all.
RG Steel purchased Baltimore’s venerable Sparrows Point and two Midwest steel companies in March 2011. In a matter of 14 months, the company was insolvent, leaving behind a trail of unpaid bills, including $4.5 million in property taxes owed to Baltimore County and $5.4 million in unpaid water bills to Baltimore City.
Above, final page of the order authorizing the executive bonuses, as prepared by RG Steel lawyers and submitted to Judge Carey. Below, the signed order with the only change penned at the bottom. (Downloaded from court records)
The Brew compared the judge’s order and supplemental material with the drafts submitted to his office by RG Steel’s team of attorneys at Morris, Nichols, Arsht & Tunnell and Willkie Farr & Gallagher.
After hearing from various parties, including the U.S. Trustee and the Official Committee of Unsecured Creditors, Judge Carey disregarded the motions by both parties to limit – or even disallow – the bonuses as unduly enriching “insiders” at the expense of the estate.
Carey also agreed to the request by RG Steel’s lawyers to keep sealed the percentages of the potential $20 million bonus pool allotted to the 10 executives, led by RG Steel’s founding president and CEO, John Goodwin.
As noted by several Brew commenters, Carey has a fondness for “incentivizing” management with bonuses at bankrupt companies.
He previously authorized nearly $100 million in bonuses (in chunks of $57 million and $40 million) for the managers and executives of the Tribune Co., which owns The Baltimore Sun among other media properties.
Last week the company emerged from bankruptcy after four years of receivership under Judge Carey’s supervision.
Corporate Lawyer
Prior to being appointed a U.S. bankruptcy judge in 2001, Carey practiced corporate law at Fox, Rothschild. He represented “financial institutions, corporate creditors, landlords and debtors in bankruptcy, workouts and financing matters,” according to a biographical sketch.
Carey serves as co-president of the Delaware Bankruptcy Inn of Court and is a member of the National Conference of Bankruptcy Judges and the Turnaround Management Association. He is also a contributing author to the Collier Forms Manual, presumably writing his own material there.