Dana Bankruptcy Surprise

The federal bankruptcy judge in the Dana Corporation case, Judge Lifland, has ruled that the executive pay plan is illegal because it amounts to a prohibited retention payment.  The ruling is a surprise because the payment was structured to technically be a bonus and not a "retention" payment, giving the Judge, if he choose to use it, a literal way of approving the payment.  The Judge refused, using the "if it walks like a duck..." argument.  The holding is a pleasant surprise because the bankruptcy judges have an incentive to encourage bankruptcy filings in their courts (insolvent companies shop for courts) and the holding will, no doubt, drive some filings away from the New York court.  The ruling showed courage (not shown by the Delaware Supreme Court in the Disney case, a court also sensitive about the effect of its decisions on corporate elections to incorporate in the state).