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ARTICLE · 23 MARCH 2026

When The Top Hat Tips: Protecting Executive Compensation From The Creditors' Hit List

Foley & Lardner LLP
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Your company is heading towards Chapter 11, and suddenly a portion of executive compensation has become a creditor target. Senior executives (and key leaders) want to know when and how much they will get paid. Creditors scrutinize every payment to senior executives

United StatesInsolvency/Bankruptcy/Re-Structuring
Michael Abbott
Michael Abbott
Edward Green
Edward Green
Arthur Phillips
Arthur Phillips
Jake William Gordon
Jake William Gordon
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Your company is heading towards Chapter 11, and suddenly a portion of executive compensation has become a creditor target. Senior executives (and key leaders) want to know when and how much they will get paid. Creditors scrutinize every payment to senior executives.

The board must thread the needle between competing interests while preserving enterprise value. When Chapter 111 becomes a real possibility, non-qualified deferred compensation (NQDC) arrangements and "top-hat" plans can quickly transform from retention tools into contested liabilities. This article provides a practical framework for distressed companies navigating top-hat plans, covering:

  • What top-hat plans are and why they are uniquely vulnerable in distressed companies.

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