Heating Oil Partners granted court OK for key employee retention plan

By Caroline Salls

Pittsburgh, Feb. 17 - Heating Oil Partners, LP obtained court approval of a key employee retention plan, according to a Friday filing with the U.S. Bankruptcy Court for the District of Connecticut.

The plan has two components: severance protection for four tier I employees and a retention program that provides a stay bonus payable to 22 tier II employees. The retention program also includes a discretionary payment pool.

Tier I participants are the company's four senior executive officers. They will receive severance protection in the form of a lump payment equal to their current annual salary, to be made within seven days of termination.

Tier II participants include employees who hold key posts in finance and sales and marketing, as well as the branch managers for the company's various locations.

The plan provides for a payment equal to 15% of each participants' annual base salary and is payable 30% upon court approval of the plan and 70% upon the earlier of the effective date of a confirmed plan of reorganization, consummation of a sale of the company's assets and Oct. 1, 2006.

In order to qualify for the retention payments, each tier II employee must stay employed by the company until the earlier of confirmation of a plan of reorganization; the closing of a sale of substantially all of the company's assets; dismissal without cause, including as a result of conversion or dismissal of the Chapter 11 cases or the appointment of a Chapter 11 trustee; and Oct. 1, 2006.

The plan provides an additional $300,000 that management can use to retain employees, other than tier I employees, deemed critical to the restructuring effort.

According to the filing, the current out-of-pocket cost of the plan is $657,843, including the discretionary funds for tier II employees.

The cost of the tier I severance payment ranges from $0 to $1.08 million.

Residential heating oil distributor Heating Oil Partners filed for Chapter 11 on Sept. 26. Its case number is 05-51271. It is the operating subsidiary of Toronto-based Heating Oil Partners Income Fund, which filed in Canada under the Companies' Creditors Arrangement Act.

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