OREANDA-NEWS. The United Mine Workers of America (UMWA) union has asked a bankruptcy judge to reject Patriot Energy's proposed employee incentive and retention plans.

The union urged the court to deny Patriot's 3 July motion seeking approval of the plans, which would give the five most-senior executives at the company $1.75mn-3.5mn in incentive pay. The company is also proposing paying $2.8mn to retain 47 "critical" employees.

Some bonuses attached to the retention plan exceed those of comparable plans advisers used in making their calculations, the union said in its 10 July filing with the US Bankruptcy Court for the Eastern District of Virginia. Meanwhile, the incentive plan sets too low a bar for performance "and virtually guarantees payments to individuals likely to continue to hold their jobs post-bankruptcy with the new owners, all while UMWA employees and retirees face huge uncertainty and job, benefit and pension losses."

The UMWA, which represents over 2,500 active and laid-off Patriot employees, has also objected to the coal producer's sale and auction plans, including the proposed sale of most of its assets to Blackhawk Mining. The union claims the agreement, which was entered on 23 June, leaves open the possibility that Blackhawk will cast off liabilities or obligations under UMWA's collective bargaining agreements.

The court is expected to review Patriot's motions at one of six upcoming omnibus hearings. The next hearing is scheduled for 22 July with the last hearing scheduled on 16 September, according to an 8 July notice.

Patriot believes its programs set a "very challenging goal" for executives and senior employees to cut costs and reach a plan to exit Chapter 11 proceedings as "expeditiously as possible," according to a 3 July motion. It also thinks the programs will help stem the tide of of voluntary resignations at the company from employees having little clarity on the restructuring process.

As of earlier this month, Patriot had 101 employees at its headquarters compared with 170 employees at the end of 2013. Voluntary resignations have accounted for most of the drop.

But the UMWA said the incentive and retention programs violate bankruptcy codes.

"The proponent of a bonus plan must show that it is a performance-based ‘pay for value' plan, not a ‘pay to stay' plan," the union said. It also called the retention proposal a "disguised retention bonus plan."