There will be no "golden parachute" for the president of bankrupt hedge fund GSC Group if a federal bankruptcy monitor gets her way.
Tracy Hope Davis has objected to a proposed $1 million bonus for Peter Frank, arguing that it is barred by federal bankruptcy law. Davis said the payment, sought last month by Chapter 11 trustee James Garrity, would be an impermissible "pay to stay" payment—and called the bonus unnecessary, anyway.
Garrity last month praised Frank's "invaluable assistance" and warned that Frank is "critical" to the conclusion of the bankruptcy case. The trustee earlier this month unveiled a plan to sell GSC's assets to hedge fund Black Diamond Capital Management, GSC's biggest creditor.
But Davis alleges that Frank has not received the "bona fide" job offer that would make the payment acceptable. She also questioned the goal set for the payment—the sale of the GSC assets—which she called "easily within the debtors grasp."
"This court has showed a willingness to deny a bonus program under similar circumstances," Davis wrote.
The monitor also blasted the size of proposed payout, noting that it was more than three times as much as Frank's annual salary.
Federal Bankruptcy Court in Manhattan is set to consider the bonus payment today.