That is only valid when the plan of bankruptcy was to avoid liquidation. This buyout became a veiled liquidation in the late 00s early 10s[1]. They need to prop up Sears and K-Mart stores long enough to pay leases to support Seritage Growth Properties property conversions to be prepared to bring in new tenants[2][3]. I guess you need to pay those out to fool a bankruptcy court into selling you the assets in for less than they are worth to liquidators. Which you can then continue to liquidate in secret under the guise of improving efficiency.

Its nice to see bankruptcy courts wising up to these schemes, but I'm not sure this isn't something lawmakers or regulators need to adjust to avoid more of.

[1] https://www.chicagotribune.com/business/ct-biz-sears-lampert...

From the linked article: "In 2015, Sears sold 235 stores, along with its stake in joint ventures involving 31 more properties, to real estate investment trust spinoff Seritage Growth Properties. Lampert is both a stakeholder in Seritage and its chairman."

[2] https://www.fool.com/investing/2018/08/01/heres-why-seritage... [3] https://www.fool.com/investing/2018/11/06/with-sears-on-the-...

They don't need to because if the creditors really wanted to limit retention bonuses then they would. They see it as an investment that they will get a return on by having key people around to run down the business in an organized way and maximize the value of assets. The bonuses are the only incentive to keep key people around on a sinking ship that needs needs guidance. If it weren't for that anyone remotely good would be among the first out the door so they could get a better job.