Rubio’s employee incentive program draws objection from U.S. trustee

By Sarah Lizee

Olympia, Wash., Dec. 8 – Rubio’s Restaurants, Inc.’s proposed key employee incentive program drew an objection Monday from Region 3 U.S. trustee Andrew R. Vara, according to a filing in the U.S. Bankruptcy Court for the District of Delaware.

The company is seeking approval of a plan that awards bonuses to 10 members of its senior management team.

All 10 are insiders who received prepetition bonuses under what is known as the “compensation plan,” Vara said.

“The compensation plan payments along with the proposed key employee incentive program payments for at least four of the participants are significant,” the U.S. trustee stated.

“Further, debtors have not met their burden of showing that the incentive targets in the KEIP are actual reaches or stretches for the debtors.”

As previously reported, Vara also objected to the company’s Chapter 11 plan of reorganization. Specifically, he said he objects to the exculpation provisions of the plan “because they exculpate many persons and entities that are not fiduciaries of the debtors’ estates.”

“Further, the exculpation provided under the plan is not limited to actions or inactions taking place during the bankruptcy cases (i.e., between the petition date and the effective date), as required by applicable case law,” he said.

“For these reasons, the U.S. trustee respectfully submits the plan should not be confirmed absent revision of the exculpation related provisions.”

Rubio’s Restaurants is fast casual restaurant chain based in Carlsbad, Calif. The company filed bankruptcy on Oct. 26 under Chapter 11 case number 20-12688.

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