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| Circuit City’s ex-CEO to get $350,000 in bonuses by Louis Llovio |
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While Circuit City’s creditors wait to get paid, James A. Marcum, the company’s former acting president and CEO, will collect $350,000 in bonuses and charge $700 per hour in consulting fees.
U.S Bankruptcy Judge Kevin R. Huennekens approved the bonus and the fee last week.
In an order filed Thursday, the judge wrote that Marcum earned the bonus because of his work winding down the now-defunct consumer electronics retailer, once the nation’s second largest.
“The full experience, expertise, unique skills and enthusiastic involvement of Mr. Marcum has been beneficial to the [Circuit City’s] efforts to maximize value for their estate,“ Huennekens wrote.
Circuit City filed for bankruptcy in November 2008.
Two months later, the Henrico County-based retailer announced it would liquidate its assets, shutter its remaining stores and dismantle the company. At the time, Circuit City had about 600 U.S. stores and 34,000 U.S. employees, including about 2,000 in the area.
As part of that wind-down process, remaining employees must get as much out of the remaining assets as possible. The money they collect goes to creditors.
The bonus money going to Marcum will be paid in two installments.
The first $175,000 was to be paid within three days after the order was approved. The second half of the bonus will be paid once a final liquidation plan goes into effect.
Marcum, who took a job last month as president and CEO of Nashville, Tenn.-based Central Parking Corp., will receive the consulting fees for helping Circuit City as it finalizes and gets approval on the plan that spells out how creditors will get paid.
Under the consulting agreement filed with the court, Marcum can charge up to $62,500 per month.
Marcum became Circuit City’s top executive in September 2008, less than two months before the retailer filed for bankruptcy. He replaced Philip J. Schoonover.
A hearing to approve the final liquidation plan was scheduled for last week but has been delayed until April 6. The hearing has been postponed about five times since it was originally scheduled for Nov. 23.
Once the plan is approved, a trust will be set up to liquidate any remaining assets. The money will go to pay fees and creditors.
The plan calls for unsecured creditors, such as suppliers, to get as much as 13.5 cents on each dollar owed. There are between $1.8 billion to $2 billion in unsecured claims.
Secured creditors, including banks that lent the chain money and secured it with collateral, are owed between $5 million and $20 million. That group of creditors would recover 100 percent of what they are owed.
Priority claim holders, who are owed as much as $95 million, also would get the full amount owed to them.
Shareholders would receive nothing.
Douglas M. Foley, an attorney with Richmond-based McGuireWoods, Circuit City’s Virginia attorney, said the hearing has been delayed so the company can work out tax issues from the sale of Circuit City’s InterTAN retail division in Canada.
Once those details are worked out, the hearing will happen, he said.
“Creditors have overwhelmingly voted for the plan, so we don’t see a problem” getting it approved by the bankruptcy judge, Foley said.
Of the creditors allowed to vote on the plan, about 84 percent voted to approve it, according to court papers.
Robert M. Lawless, a professor at the University of Illinois College of Law who specializes in bankruptcy law, said the delay is not unusual in a complex case like Circuit City’s.
“There is not much point in having the hearing before everything is ready,“ he said.
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Contact Louis Llovio at (804) 649-6348 or LLLovio@timesdispatch.com.
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