Dive Brief:

• U.S. bankruptcy court Judge Mary Walrath Tuesday disallowed Sports Authority’s plan to award as much as $2.85 million in bonuses to four executives overseeing the company’s liquidation, calling the payouts “inappropriate” in the face of worker job losses, the Wall Street Journal and Reuters report.

• Sports Authority had attempted to keep those executives’ names under wraps, angering many of the 14,000 store workers losing their jobs. "Quite frankly, I’m not surprised the employees are sending angry emails,” Walrath said, according to the Wall Street Journal.

• Landlords and lenders last month also protested Sports Authority’s plans for the executive bonuses. 

Dive Insight:

Sports Authority has insisted that the bonus pay it was reserving for its advisors and executives was essential to ensuring that top-notch talent was around to help keep costs down during the bankruptcy process. But creditors and workers alike have cried foul, and Judge Walrath seems to be irritated on workers’ behalf.

Indeed, the U.S. Trustee—a Justice Department watchdog officer that often fights such executive pay plans during bankruptcy—had argued that Sports Authority’s “incentive” argument for the bonuses were “profoundly disturbing." Lawyers for U.S. Trustee Andrew Vara said the bonus plan didn’t meet the standard to incentive pay in bankruptcy, the Journal reports.

Sports Authority lawyer Robert Klyman had attempted to argue that because the bonuses were coming from lenders, they didn’t require court approval, drawing a “Not so fast” from the judge. Walrath did approve a settlement among Sports Authority, its lenders and creditors over remaining cash and claims, where landlords will get most of the rent unpaid during the bankruptcy, and lenders will give up claims against suppliers and other unsecured creditors. Those unsecured creditors in turn have agreed to abandon their move to convert the case to Chapter 7, which would expedite store closings and install a trustee to oversee the completion of the bankruptcy process.

Sports Authority’s Chapter 11 proceedings have been marked with various legal tussles, including more than 160 lawsuits the retailer filed in March. At issue then was some $85 million worth of winter gear and other goods being sold at Sports Authority stores—items suppliers wanted returned because they feared not getting paid. The scuffles stymied the chain’s efforts to sell more stores and forced the company to liquidate instead.

As its operations wind down, Sports Authority—once the largest sporting goods chain in the U.S.—is a slim shadow of its former self. In 2006, when the retailer was acquired by private equity firm Leonard Green & Partners for $1.3 billion, its future was bright. But mounting debt, weak e-commerce returns and increased competition from general merchandise brands like Amazon, Wal-Mart and Target, as well as mounting challenges from apparel retailers like Gap, spelled doom.