Although their charge went bankrupt, senior executives of the Ruby Tuesday casual-dining chain can still be paid their performance and retention bonuses, a federal court ruled Friday.
The U.S. Bankruptcy Court overseeing Chapter 11 proceedings by Ruby Tuesday stressed that it was granting permission for the bonuses to be paid, and not directing the chain to make the payments.
In addition, it noted that payments could be made only after the effective date of an approved bankruptcy plan, and that the recipients of the incentive-based bonuses must waive their right to severance pay.
The court stated that paying the bonuses was in the best interests of Ruby Tuesday’s debtors. Denying the payments could have resulted in “immediate and irreparable harm” to those who hold a debt against the company, technically known as RTI Holding.
Ruby Tuesday filed for bankruptcy protection in early October after closing more than 150 locations and watching sales plummet during the coronavirus pandemic. Executives indicated at the time that problems evident before the public health crisis were aggravated by the shut down of restaurant dining rooms virtually nationwide.
The company’s request to pay bonuses is the latest of several unusual requests under bankruptcy protection. Earlier, it sought and was granted access to funds earmarked for pensions for former executives.