U.S. judge OKs bonus for sole Blockbuster employee

Blockbuster Inc (BLOAQ.PK) won court approval for a bonus plan for its sole remaining employee after the bankrupt movie rental chain agreed to cap the payout at $150,000.

Judge Burton Lifland approved the plan at a hearing in U.S. Bankruptcy Court in Manhattan on Tuesday, rejecting opposition from U.S. Trustee Tracy Hope Davis.

The trustee earlier this month objected to the plan, which would pay Blockbuster executive Bruce Lewis 1 percent of creditor payouts, and 1.25 percent of payouts made before the end of July. The trustee said the plan could pay Lewis, the company's senior vice president of tax, an "unquantified" amount.

Lifland said Blockbuster's agreement to cap the bonus cleared up his "primary" worry.

"The court's main concern has always been that there would be a blank check available to Mr. Lewis," Lifland said.

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Blockbuster, which went bankrupt last year in the face of competition from Netflix (NFLX.O) and other direct-to-consumer rental services, was sold to Dish Network Corp (DISH.O) in April for about $320 million.

Lewis, the movie retailer's only remaining employee, is in charge of winding down the company's operations, preparing its annual filings and finishing up its tax returns.

Brian Masumoto, an attorney for the trustee, argued at Tuesday's hearing that Lewis, who makes a base salary of $375,000, is already sufficiently compensated. Lifland chastised Masumoto for the argument, refusing to consider that factor.

"If I did that, I would rank everybody's compensation and fees against my own government salary," the judge said. "I do hope Mr. Masumoto is not making judgments based upon his own compensation from the United States government."

The trustee has taken issue with Blockbuster's payment plans in the past. In June, Davis' office called on Lifland to delay payment to its attorneys and advisers, saying the company had too little remaining value to risk immediate payment.

The case is In re: Blockbuster Inc, U.S. Bankruptcy Court, Southern District of New York, No 10-14997.