Hansen-Mueller Co., a Nebraska-based grain company, has asked a bankruptcy court to approve $700,000 in incentive and retention payments for 27 key employees as it races to liquidate assets and complete auctions within weeks of its Chapter 11 filing.
The Omaha company filed for bankruptcy protection on November 17, 2025, and immediately moved to implement a $300,000 Key Employee Incentive Plan (KEIP) for four executives and a $400,000 Key Employee Retention Plan (KERP) for 23 other employees. The motion, filed in the United States Bankruptcy Court for the District of Nebraska, argues the payments are essential to prevent an exodus of employees with specialized grain industry knowledge during a compressed liquidation timeline.
"The Debtor and its advisors have determined that the KEIP and KERP are critical to the Debtor's sale/liquidation process and value maximization strategy," the company stated in its motion filed November 17.
The company faces particularly tight deadlines. Hansen-Mueller must complete an auction of its Toledo, Ohio oats facility by December 12, 2025—just 25 days after filing—and conclude sales of working capital and fixed assets by December 16. By January 1, 2026, the company aims to liquidate 90% of its open oats contracts and 75% of its physical oats inventory, which the motion describes as "the Debtor's largest and most difficult grain asset to liquidate."
Performance-Based Executive Incentives
The KEIP ties executive compensation to nine specific performance metrics, including maintaining budget compliance within a 115% weekly variance, executing accelerated auction timelines, retaining the workforce, and managing the liquidation of grain assets. Payments would only be made if these targets are achieved, distinguishing the plan from simple retention bonuses.
According to the motion, two of the four executives covered by the KEIP have been working more than 15-hour days in recent weeks and have assumed duties previously performed by the company's Chief Financial Officer, who resigned shortly before the bankruptcy filing.
Chief Restructuring Officer Michael Compton, who was engaged before the bankruptcy filing along with financial advisor Silverman Consulting, Inc., concluded that the incentive and retention programs would "allow Debtor to maximize the value of its assets by having industry experts oversee the liquidation of grain inventory and other assets."
The motion states: "Mr. Compton believes that the KERP/KEIP participants have industry and Debtor-specific knowledge that would be impossible to replace on a short-term basis and if these KERP/KEIP participants decided to leave the Debtor, the Debtor would not achieve as good of a sale price for its grain inventory and other assets as it would with their participation."
Retention Plan for Non-Insider Employees
The KERP, which the company describes as "effectively a roll-up of bonuses that have accrued for Key Employees," is designed to prevent 23 non-insider employees from seeking alternative employment during the bankruptcy process. If all employees remain through the designated payout dates, the total cost would be approximately $400,000.
The company took pains to emphasize that none of the KERP participants qualify as "insiders" under bankruptcy law, despite some having titles that might suggest officer status. According to the motion, these employees report to more senior personnel, must obtain approval before taking significant actions, do not serve on or report to the Board of Directors, and have authority limited to specific business segments rather than company-wide operations.
"Although the Key Employees are valuable to the Debtor's business and are particularly vital during the chapter 11 Case, their titles do not reflect that such Employees control the Debtor's operations," the motion states.
Legal Framework and Precedents
Hansen-Mueller seeks approval under sections 363(b), 363(c), and 503(c) of the Bankruptcy Code. The motion argues both plans satisfy the business judgment test established in In re Dana Corp., which courts use to evaluate whether incentive and retention plans are justified by the facts and circumstances of a case.
The company contends that Section 503(c)(1) of the Bankruptcy Code—which imposes strict limitations on retention payments to insiders—does not apply to the KEIP because it is incentive-based rather than a "pay to stay" arrangement. For the KERP, the company argues the provision is inapplicable because none of the participants are insiders.
"In this case, the KEIP is an incentive plan, and not a 'pay to stay' retention plan," the motion states. "The payments are tied to performance metrics. No payments are made if the thresholds are not met."
The debtor filed a concurrent motion seeking shortened notice of seven days, citing concerns that employees will quickly depart without the incentive programs in place.
Hansen-Mueller's prepetition secured lenders include BMO Bank N.A., serving as administrative agent and collateral agent, along with Farm Credit Services of America, PCA, Farm Credit Mid-America, PCA, and CoBank, FCB.
The case is In re Hansen-Mueller Co., Case No. 25-81226, in the U.S. Bankruptcy Court for the District of Nebraska. The company is represented by Koley Jessen P.C., L.L.O., with attorneys Brian J. Koenig, Donald L. Swanson, and Trevor J Lee.
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