Linqto Texas, LLC and its affiliated debtors are asking a federal bankruptcy court to approve a half-million-dollar retention plan aimed at keeping 12 essential employees on board through the conclusion of their liquidating Chapter 11 cases, according to a motion filed December 9, 2025.
The Retention Plan Details
The Key Employee Retention Plan would distribute $510,034 among non-management staff members who are deemed critical to administering the bankruptcy estates and implementing a proposed reorganization plan, court documents show. Individual awards average approximately $42,503, representing roughly 28.3% of participants' 2025 base salaries. Payments would be made upon the effective date of the debtors' restructuring plan, provided employees remain with the company through that milestone.
The 12 participants work across various departments including software engineering, finance and administration, design, data analysis, and customer success. Management contends these roles are invaluable to current operations and that replacing these employees at this stage of a liquidating bankruptcy would be difficult if not impossible.
Platform Collapse and Regulatory Failures
The retention program comes as Linqto navigates bankruptcy proceedings following the March 2025 suspension of its investment platform, which provided more than 13,000 customers with indirect access to private company equity investments focused on the technology sector. The platform operated from February 2020 until regulatory compliance failures forced its shutdown, according to court filings.
According to the motion, new management discovered serious regulatory compliance violations shortly after their appointment in early 2025, including findings from pending investigations by the U.S. Securities and Exchange Commission and the Financial Industry Regulatory Authority. The discovery of what court documents describe as systematic and pervasive non-compliance with securities laws prompted the decision to indefinitely suspend platform operations on March 13, 2025, effectively ending the company's primary revenue-generating activities.
Justification for Employee Incentives
The debtors argue the retention plan is necessary to prevent further employee departures after multiple workforce reductions and resignations during the bankruptcy proceedings. Management indicated that without the financial incentive, key personnel would likely seek employment elsewhere given the stress of bankruptcy administration, increased workloads from staffing cuts, and the knowledge that the business will cease operations after plan confirmation.
The proposed retention plan is designed to replace performance-based bonuses that employees historically received but can no longer be paid due to the platform shutdown. Court documents note that some employees have faced online harassment and threats during the bankruptcy proceedings, adding to the challenges of retention.
The debtors emphasize that none of the KERP participants are corporate insiders as defined under bankruptcy law, meaning they lack discretionary control over substantial budgetary amounts or significant control over corporate policies and governance.
Benchmarking and Industry Standards
To support the reasonableness of the proposed compensation, the debtors' restructuring advisors at Portage Point Partners prepared a benchmarking analysis examining retention plans from 33 companies that filed for bankruptcy protection between 2020 and 2025. Those companies had annual revenues ranging from $13.8 million to $827 million and retention programs covering between 2 and 62 participants. The analysis found that Linqto's total retention pool ranks in the 72nd percentile, while the average individual award ranks in the 61st percentile among comparable programs.
Legal Framework and Arguments
The debtors assert the retention plan qualifies as an ordinary course transaction under Section 363(c) of the Bankruptcy Code because it continues prepetition compensation practices and aligns with industry standards for technology and financial services companies in bankruptcy. Alternatively, they argue the plan represents a sound exercise of business judgment under Section 363(b) and satisfies the facts-and-circumstances test established by Section 503(c)(3).
In their legal analysis, the debtors applied the six-factor test established in the Dana Corporation bankruptcy case, which courts frequently use to evaluate retention and incentive programs. The factors examine whether the plan achieves reasonable results at reasonable cost, applies fairly across eligible employees, conforms to industry standards, reflects adequate due diligence, and benefited from independent counsel review. The debtors maintain their proposal satisfies all six criteria.
Broader Bankruptcy Proceedings
The retention motion follows other significant developments in the Chapter 11 cases. In November, the debtors filed a joint reorganization plan and disclosure statement after reaching a settlement with the Official Committee of Unsecured Creditors and creditor John E. Deaton regarding case administration funding and treatment of customer claims. The committee was appointed by the U.S. Trustee on July 18, 2025, shortly after the July 7 petition date.
The motion notes that the total retention cost falls within the approved budget established under the debtors' debtor-in-possession financing order.
Case Information and Next Steps
The Linqto entities filed for bankruptcy protection in the United States Bankruptcy Court for the Southern District of Texas, Houston Division. The jointly administered cases proceed under case number 25-90186.
Creditors and other parties in interest have 21 days from the December 9 filing date to file objections to the proposed retention plan. If no objections are filed, the court may treat the motion as unopposed and grant the requested relief.
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