deCODE genetics, Inc., sought court authority to reject a CIC Benefit Plan for the company's managerial employees

On New Year's Eve, deCODE genetics, Inc., which filed for chapter 11
protection on November 16, 2009, sought court authority to reject a
Change in Control Benefit Plan for the company's managerial employees.
deCODE genetics intends to utilize the chapter 11 case to sell its
interests in a subsidiary, Islensk erfdagreining ehf, its intellectual
property and certain drug compounds to Saga Investments LLC or a higher
bidder. A hearing on the approval of a sale is scheduled for January
14, 2010. All remaining assets and operations of deCODE will then be
liquidated pursuant to a plan of liquidation.

In the motion,
deCODE genetics acknowledges that the transactions that are
contemplated by the sale to Saga could constitute a change in control
under the benefit plan, which would entitle eligible employees to
"among other things, the vesting of stock options or other equity
plans, lump sum severance payments and certain insurance-related
benefits." Following the sale to Saga (assuming no higher bidder is
successful at a January 12th auction), "most of the Eligible Employees
will likely remain in the employ of the ultimate purchaser." For those
employees, the benefits that would accrue under the plan would
constitute a "windfall" according to deCODE's motion. As a result,
deCODE's board of directors terminated the plan on December 30, 2009.
However, deCODE is also seeking court approval to reject the plan under
section 365 of the bankruptcy code in the event that "such termination
is later deemed to be ineffective."

netDockets has made a complimentary copy of the motion available on JDSupra.

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