Severance cut, but exec bonuses paid, directors protected

Creditor protection is a nasty business as our laid off brothers and sisters on the television side of Canwest found out Tuesday. They won’t be getting their severance pay because the law allows companies to leave laid off workers high and dry. That’s right, former employees owed severance go into the long line of unsecured creditors, likely to get a few cents on the dollar if they are lucky.
But others do rather better in the process. The already wealthy make sure to look after their friends and partners in driving the company into the ground.
Documents filed in court show that Canwest plans to pay almost$10 million  in bonuses to keep 20 “key” executives in their jobs as the restructuring occurs  under bankruptcy protection, according to Reuters.
“And while we’re talking about who gets money at CanWest, the documents show that the company’s recently hired chief restructuring officer, Hap Stephen , has been receiving monthly cheques of $125,000 since he quietly started in July, plus a signing fee of $5,000. With his contract set, for now, to expire at the end of the year, that’s a cool $755,000,” according to the Globe and Mail.
But, that’s not all.
“According to documents filed as part of CanWest’s bankruptcy protection proceedings in the Ontario Superior Court Tuesday, the company’s directors, including boardroom heavyweights Derek Burney and David Kerr , have unusual clout.
“The company’s directors and officers insurance, which shields boardroom bigwigs from lawsuits and other liabilities, technically expired in August and directors have put the company on notice that they will walk unless they are covered.
“Documents show the company had total D&O insurance of $40-million, but the policy expired on Aug. 31. CanWest got a bit of a reprieve when the policy was extended by two months until the end of October, but as of yesterday, company documents said: “CanWest Global has been unable to obtain additional or replacement D&O insurance coverage.”
“As a result, the directors have demanded $20-million of protection from the company, a claim that would rank ahead of almost all other creditors.
“A CanWest court document said the charge is “necessary” so the company can “benefit from [the] directors and executives experience.” Over to you, Madam Justice Sarah Pepall .”
Workers get the shaft, executives are paid bonuses,  the directors get protected and “restructuring experts” get to feast on the dripping roast.
What a system!

Gary Engler