Case 24-10628-KBO Doc 8 Filed 04/01/24 Page 1 of 48
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`IN THE UNITED STATES BANKRUPTCY COURT
`FOR THE DISTRICT OF DELAWARE
`
`
`In re:
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`WOM S.A., et al.1
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`
`)
`) Chapter 11
`)
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`) Case No. 24-______ (___)
`)
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`)
`(Joint Administration Requested)
`)
`
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`Debtors.
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`DEBTORS’ MOTION FOR ENTRY OF INTERIM
`AND FINAL ORDERS (I) AUTHORIZING THE DEBTORS TO (A) PAY
`PREPETITION WAGES AND OTHER EMPLOYEE OBLIGATIONS AND
`(B) MAINTAIN EMPLOYEE BENEFIT PROGRAMS AND PAY RELATED
`ADMINISTRATIVE OBLIGATIONS; AND (II) GRANTING RELATED RELIEF
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`The above-captioned debtors and debtors-in-possession (collectively, the “Debtors” or
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`the “Company”) state as follows in support of this motion (this “Motion”):
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`Relief Requested
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`1.
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`The Debtors seek entry of an interim order (the “Proposed Interim Order”),
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`substantially in the form attached hereto as Exhibit A, and a final order (the “Proposed Final
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`Order,” and together with the Proposed Interim Order, the “Orders”), substantially in the form
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`attached hereto as Exhibit B: (a) authorizing but not directing, the Debtors to pay and honor
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`certain prepetition employment-related claims, including (i) wages, salaries, other compensation,
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`and reimbursable expenses, (ii) amounts owed to Independent Contractors (as defined below);
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`(iii) Directors’ Fees (as defined below); (iv) foreign income tax and withholding taxes and other
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`amounts withheld related to termination (including, employees’ share of insurance premiums,
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`taxes, and retirement contributions), (v) reimbursable expenses, (vi) health benefits, retirement
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`1 The Debtors in these chapter 11 cases (these “Chapter 11 Cases”), and each Debtor’s federal tax identification
`number in their applicable jurisdiction of incorporation, are as follows: Kenbourne Invest S.A. (2018 2206 815);
`NC Telecom II AS (59.208.720-0); WOM Mobile S.A. (99.517.000-0); WOM S.A. (78.921.690-8); Conect
`S.A. (96.965.220-k); and Multikom S.A. (78.456.640-4). The location of the Debtors’ service address in these
`Chapter 11 Cases is: General Mackenna No. 1369, Santiago, Chile.
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`Case 24-10628-KBO Doc 8 Filed 04/01/24 Page 2 of 48
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`and pension benefits, life insurance and disability insurance benefits, and (vii) time off and other
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`leave (collectively, as more fully described below and together with attendant costs and
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`expenses,2 the “Prepetition Employee Obligations”); and (b) unless otherwise set forth herein,
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`continue, in the Debtors’ sole discretion, their plans, practices, programs and policies for their
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`Employees (as defined below) (collectively, the “Employee Programs”), as those Employee
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`Programs were in effect as of the Petition Date and as may be modified, terminated, amended, or
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`supplemented in the ordinary course of business from time to time, in their sole discretion, and to
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`make payments pursuant to such Employee Programs in the ordinary course of business, as well
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`as to pay related administrative obligations.
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`2.
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`Given that the Debtors’ employees are integral to the Debtors’ ability to operate
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`their business during the Chapter 11 Cases, the Debtors’ failure to satisfy certain Prepetition
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`Employee Obligations would jeopardize employee loyalty and morale, potentially causing
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`employees to seek alternative employment and causing immediate and irreparable harm to the
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`Debtors’ operations. Accordingly, the Debtors seek authority, but not direction, in their sole
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`discretion, to continue to honor, pay, satisfy or remit all claims and other obligations related to
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`Prepetition Employee Obligations in the ordinary course and consistent with their past practices,
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`subject to the limitations discussed herein.
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`3.
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`The Debtors seek authority (a) pursuant to the Proposed Interim Order, to pay
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`and/or honor, in the ordinary course of business as such obligations become due and payable,
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`Prepetition Employee Obligations in an aggregate amount of approximately $9,393,214
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`(the “Interim Amount”) and (b) pursuant to the Proposed Final Order, continue to pay and/or
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`honor all Prepetition Employee Obligations in the ordinary course in the aggregate amount of
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`2 The Debtors have provided details regarding certain administrative costs where applicable in this Motion, but,
`for the avoidance of doubt, the Debtors hereby request authority to pay all administrative costs associated with
`Prepetition Employee Obligations, regardless of whether such costs are specifically described herein.
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`2
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`Case 24-10628-KBO Doc 8 Filed 04/01/24 Page 3 of 48
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`approximately $11,361,842 (inclusive of the Interim Amount) and in the ordinary course of
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`business as such obligations become due and payable subject to the limitations described herein.
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`4.
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`By this Motion, the Debtors request authority, but not direction, pursuant to both
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`the Proposed Interim Order and Proposed Final Order, to honor all of their Prepetition Employee
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`Obligations except that, subject to the Cap Exceptions (as defined below), the Debtors do not
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`seek authority to make payments on account of Prepetition Employee Obligations to any
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`individual current or former Employee to the extent such payments (i) would be to an Employee
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`whose employment with the Debtors terminated more than 180 days prior to the Petition Date, or
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`(ii) exceed the priority cap of $15,150 contained in 11 U.S.C § 507(a)(4) (the “Priority Cap”).
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`5.
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`Notwithstanding the foregoing, and for the reasons set forth more fully below, the
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`Debtors seek authority, but not direction:
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` pursuant to the Proposed Final Order only, to satisfy Prepetition Employee
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`Obligations in the ordinary course of business, including payments to current and
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`former Employees in excess of the Priority Cap, if failing to satisfy the Prepetition
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`Employee Obligations would, in the Debtors’ reasonable judgment or upon the
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`advice of counsel, result in any of the following: (a) civil, criminal, or other
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`liability to the Debtors (in excess of the unpaid amount) or to any of the Debtors’
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`officers, directors, or other Employees; (b) other than these Chapter 11 Cases, the
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`commencement of, or the obligation of the Debtors to commence, an insolvency
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`proceeding, other proceeding, or winding up; or (c) any sanction against the
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`Debtors or other limitation on the right of a Debtor to operate its business (the
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`“Fiduciary Exception”);
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`3
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`Case 24-10628-KBO Doc 8 Filed 04/01/24 Page 4 of 48
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`
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`pursuant to the Proposed Final Order only, to make certain payments as set forth
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`herein in excess of the Priority Cap on account of the Employee Incentive
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`Programs (the “Non-Insider Employee Cap Exception” and, together with the
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`Fiduciary Exception, the “Cap Exceptions”).
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`6.
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`The chart below summarizes the estimated Prepetition Employee Obligation
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`amounts sought to be paid pursuant to the Proposed Interim Order and Proposed Final Order (all
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`amounts in U.S. dollars)3:
`
`Prepetition Employee Obligations
`
`Employee Compensation
`Wages
`Variable Compensation
`Independent Contractor Obligations
`Other Compensation Programs
`Non-Insider Long-Term Incentive Program
`Non-Insider Annual Incentive Bonus
`Non-Insider Severance Obligations
`Directors’ Fees
`Expense Programs
`Deductions and Withholding Obligations
`Deductions
`Payroll Taxes
`Payroll Processing Fees
`Employee Benefit Programs
`Health Insurance Program
`Additional Insurance Program
`Unemployment Contributions
`
`Proposed Interim Order
`Amounts
`
`Proposed Final Order
`Amounts (Inclusive of
`Interim Amount)
`
`
`
`
`
`$0
`$674,898
`$5,918,367
`
`$0
`$1,090,765
`$186,837
`$46,844
`$146,939
`
`$794,898
`$206,122
`$13,527
`
`$111,224
`$97,959
`$105,102
`
`$0
`$699,388
`$5,918,367
`
`$1,863,654
`$1,090,765
`$186,837
`$46,844
`$167,347
`
`$837,143
`$212,993
`$0
`
`$114,932
`$111,633
`111,939
`
`
`3 All amounts contained herein are listed in U.S. dollars (“USD”) unless otherwise noted. All amounts have been
`converted from Chilean pesos to U.S. dollars using the currency exchange rate of 980 Chilean pesos per U.S.
`dollar, which is the approximate average of the currency exchange rates set forth by the Chilean Central Bank
`over the past 15 days.
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`4
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`Case 24-10628-KBO Doc 8 Filed 04/01/24 Page 5 of 48
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`Prepetition Employee Obligations
`
`Proposed Interim Order
`Amounts
`
`Vacation and Paid Leave Program
`Other Benefit Programs
`TOTALS
`
`
`Unknown4
`$0
`$9,393,214
`
`Proposed Final Order
`Amounts (Inclusive of
`Interim Amount)
`Unknown
`$0
`$11,361,842
`
`7.
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`As further set forth herein, the Debtors also request that all applicable banks and
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`other financial institutions (collectively, the “Banks”) be authorized to honor, process, and effect
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`payments related to the to the Employee Programs, including Prepetition Employee Obligations.
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`8.
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`In addition, the Debtors request that the Court schedule a final hearing (the “Final
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`Hearing”)5 to consider approval of this Motion on a final basis and entry of the Proposed Final
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`Order.
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`9.
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`In support of this Motion, the Debtors rely upon and incorporate by reference the
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`Declaration of Robert Wagstaff in Support of Debtors’ Chapter 11 Petitions and Requests for
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`First Day Relief (the “First Day Declaration”),6 filed contemporaneously herewith.
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`10.
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`For the reasons set forth herein, the Debtors submit that the relief requested is in
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`the best interest of the Debtors, their estates, creditors, and other parties in interest, and therefore
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`should be granted.
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`4 The Debtors estimate that as of the Petition Date, aggregate accrued but unpaid Vacation and Paid Leave (as
`defined below) totals approximately $3,163,835. Upon termination, Employees are entitled to be paid accrued
`vacation time. The Debtors expect that the majority of their obligations in respect of Other Benefit Programs
`will be satisfied by allowing Employees to take time off in the ordinary course of business and not by making
`payments upon terminations.
`5 The period between the date this Motion was filed and the Final Hearing is referred to herein as the “Interim
`Period.”
`6 Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the
`First Day Declaration.
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`5
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`Case 24-10628-KBO Doc 8 Filed 04/01/24 Page 6 of 48
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`Jurisdiction, Venue, and Predicates for Relief
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`11.
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`The United States Bankruptcy Court for the District of Delaware (the “Court”)
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`has jurisdiction to consider this Motion under 28 U.S.C. §§ 157 and 1334. This is a core
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`proceeding under 28 U.S.C. § 157(b). Venue of these Chapter 11 Cases and this Motion in this
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`District is proper under 28 U.S.C. §§ 1408 and 1409.
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`12.
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`The predicates for the relief requested by this Motion are sections 105(a), 363,
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`507(a), 541, 1107(a), and 1108 of title 11 of the United States Code (the “Bankruptcy Code”)
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`and Rules 6003 and 6004 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy
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`Rules”).
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`13.
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`Pursuant to Rule 9013-1(f) of the Local Rules for the United States Bankruptcy
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`Court for the District of Delaware (the “Local Bankruptcy Rules”), the Debtors consent to the
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`entry of a final judgment or order with respect to this Motion if it is determined that this Court
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`lacks Article III jurisdiction to enter such final order or judgment absent consent of the parties.
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`I.
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`Overview of Chapter 11 Cases
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`Background
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`14.
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`On April 1, 2024 (the “Petition Date”), each of the Debtors filed voluntary
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`petitions for relief under chapter 11 of the Bankruptcy Code with the Court. The Debtors
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`continue to operate their business and manage their properties as debtors-in-possession pursuant
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`to sections 1107(a) and 1108 of the Bankruptcy Code. Concurrently with the filing of this
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`Motion, the Debtors have requested procedural consolidation and joint administration of these
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`Chapter 11 Cases pursuant to Bankruptcy Rule 1015(b). No creditors’ committee has been
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`appointed by the Office of the United States Trustee for the District of Delaware (the “U.S.
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`Trustee”), nor has a trustee or examiner been appointed in these Chapter 11 Cases.
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`6
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`Case 24-10628-KBO Doc 8 Filed 04/01/24 Page 7 of 48
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`15.
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`The Company
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`is one of
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`the
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`fastest growing and market-leading
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`telecommunications providers in Latin America and has been the second-largest mobile network
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`operator in Chile since 2019. The Company reaches over 8.5 million customers and provides
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`prepaid and post-paid mobile voice, data, and broadband services, along with a rapidly
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`expanding “Fiber to the Home” broadband offering to consumers and business in Chile. The
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`Company’s 5G wireless broadband services deliver internet access to approximately one million
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`customers, with a coverage area that spans over 18 million people. The Company employs,
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`directly or indirectly, approximately 7,000 people in Chile.
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`16.
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`Additional factual background and information regarding the Debtors, including
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`their business operations, their corporate and capital structure, and the events leading to the
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`commencement of these Chapter 11 Cases, is set forth in detail in the First Day Declaration.
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`II.
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`Overview of the Debtors’ Workforce
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`17.
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`As of the Petition Date, the Debtors’ workforce is comprised of approximately
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`2,106 (the “Employees”), all of whom are employed by WOM S.A. and located in Chile. The
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`Debtors do not have any U.S. operations or employees.
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`18.
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`The Employees perform a variety of critical functions for the Debtors’ business,
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`including corporate functions, such as treasury, accounting, marketing, informational technology,
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`and legal, as well as operational functions, such as sales and customer service. The Employees’
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`skills, specialized knowledge, and understanding of the Debtors’ operations, infrastructure, and
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`assets are essential to the value and effective operation of the Debtors’ business. Without the
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`support and dedication of these Employees to ensure the continued operation of their business,
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`the Debtors will be unable to preserve the value of their assets and effectively reorganize through
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`their Chapter 11 Cases.
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`7
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`19.
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`Approximately forty-seven (47) Employees are represented by a union or other
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`collective bargaining structure (the “Union Employees”). The terms of employment for the
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`Union Employees are governed by collective bargaining agreements between the Debtors and the
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`applicable union.
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`20. Most of the Debtors’ rank-and-file Employees and all of the Debtors’ Employees
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`who perform management functions have signed individual employment contracts (respectively,
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`the “Non-Insider Contracts” and
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`the “Executive Contracts” and, collectively,
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`the
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`“Employment Contracts”).7 Local law in Chile requires separate, individual employment
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`contracts for each Employee. The Employment Contracts stipulate each Employee’s relationship
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`with the Debtors, describing for example, the Employee’s base salary, variable compensation
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`components and the rights and obligations of each Employee.
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`21.
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`To supplement their workforce, the Debtors also utilize the services of
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`approximately 5,282 independent contractors (the “Independent Contractors”) based in Chile,
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`who perform a variety of services for numerous departments such as retail, customer care,
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`maintenance, telesales, fiber optics technicians, collections, information technology, marketing,
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`network maintenance, and constructions. The Debtors work with Manpower Integral Services
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`Ltda. and Adecco Human Resources (together, the “Staffing Agencies”) to engage Independent
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`Contractors in temporary positions. Otherwise, the Independent Contractors are employed by
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`216 vendors (together with the Staffing Agencies, the “Independent Contractor Vendors”).8
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`7 The Executive Contracts also provide for the payment of bonuses; but such bonus provisions are not discussed
`herein. The Debtors reserve all rights to plan to submit a separate motion that would address insider
`compensation and incentive program.
`8 The Debtors are seeking authorization to continue these agreements for the time being in the ordinary course of
`business, but in an abundance of caution have chosen to disclose this information in this Motion. Nothing
`herein seeks to assume, nor should this be construed as an assumption of any of these or other contracts at this
`time.
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`8
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`22.
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`The Employees and Independent Contractors perform a variety of critical
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`functions on behalf of the Debtors and are essential to the continued operation and effective
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`reorganization of the Debtors’ business. The Debtors also seek to minimize personal hardship
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`that the Employees and Independent Contractors would suffer if Employee obligations are not
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`paid when due or as expected, and the immediate and irreparable harm that would be caused to
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`the Debtors by the lack of motivation of the Employees and Independent Contractors and the
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`prospect that they might seek employment elsewhere. Accordingly, with the commencement of
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`the Chapter 11 Cases, it is critical for their morale and continued operation of the business to
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`ensure that there is no interruption to the payment of Prepetition Employee Obligations owed to
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`the Employees and Independent Contractors.
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`III. Wages and Benefits
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`23.
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`Compensation for each Employee is comprised of a fixed component (“Wages”)
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`and a variable component, including overtime payments and other short-term cash incentives,
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`gratificacion (bonus) required by Chilean law, an “availability bonus,” and sales commissions
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`(such compensation, “Variable Compensation” and, together with Wages, “Employee
`
`Compensation”). On average, the Debtors pay approximately $4,125,000 in Employee
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`Compensation on a monthly basis. Additionally, the Debtors make certain contributions to the
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`Employee Benefit Program (as defined below), in an average monthly amount of approximately
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`$300,000.
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`A.
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`Employee Compensation
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`24.
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`The Debtors pay the Employee Compensation through direct deposit to
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`Employees’ checking accounts. The Employee Compensation is paid monthly, generally on the
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`last working day of any given month. All Variable Compensation earned during any given
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`9
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`Case 24-10628-KBO Doc 8 Filed 04/01/24 Page 10 of 48
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`month is paid during the following month’s payroll cycle. As of the Petition Date, the Debtors
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`do not have any obligations owing on account of Wages.9
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`25.
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`As of the Petition Date, the Debtors estimate that they owe approximately
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`$674,897 in accrued, unpaid Variable Compensation. By this Motion, the Debtors seek authority
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`to pay any prepetition outstanding amounts with respect to Employee Compensation, and seek
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`authority to pay continue paying all amounts owed with respect to Employee Compensation on a
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`postpetition basis in the ordinary course of the Debtors’ business, consistent with past practices.
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`B.
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`Independent Contractor Compensation
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`26.
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`The Debtors rely on Independent Contractors employed by the Independent
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`Contractor Vendors to provide services and support in the ordinary course of business that
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`otherwise would be provided by Employees. Hiring these Independent Contractors as full-time
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`Employees would increase costs. The Debtors’ ability to continue to rely on the Independent
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`Contractors is crucial to minimize disruptions to the Debtors’ operations and to continue to
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`maintain the value of the Debtors’ business. The Debtors estimate that on average, the Debtors
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`pay approximately $5,410,000 per month to Independent Contractors (the “Independent
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`Contractor Compensation”).
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`27.
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`As of the Petition Date, the Debtors estimate that approximately $5,918,367 is
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`due and owing on account of Independent Contractor Compensation. By this Motion, the
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`Debtors seek authority to pay any prepetition outstanding amounts with respect to Independent
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`Contractor Compensation, and seek authority to continue paying all amounts owed with respect
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`to Independent Contractor Compensation on a postpetition basis in the ordinary course of the
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`Debtors’ business, consistent with past practices.
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`9 The Debtors last processed payroll on March 27, 2024.
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`10
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`C.
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`Other Compensation Programs10
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`28.
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`In the ordinary course of business, Employees may earn bonuses under bonus and
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`incentive programs, specifically, as further described herein, the Long-Term Incentive Program
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`and the Annual Incentive Bonus (each as defined below and, together, the “Employee Incentive
`
`Programs”), based on specified individual and business targets. The Employee Incentive
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`Programs encourage and reward outstanding performance and are aimed at retaining Employees
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`who possess valuable and hard-to-replace knowledge and skills critical to the Debtors’ business.
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`29.
`
`The Debtors believe that continued payments under the Employee Incentive
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`Programs are essential to maintaining Employee performance and morale, and, therefore, is
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`essential to maintaining the continuity and stability of the Debtors’ operations. The Employee
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`Incentive Programs drive Employee performance and productivity and align Employees’
`
`interests with those of the Debtors. Further, the Employee Incentive Programs form an important
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`part of many non-Insider Employees’ overall compensation packages. Increased uncertainty
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`around the Employee Incentive Programs could have an adverse impact on Employee morale,
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`cause Employees to seek other employment or cause potential employees to avoid joining the
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`Debtors, causing immediate and irreparable harm to the Debtors’ continuing operations and their
`
`estates.
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`i. Non-Insider Long-Term Incentive Program
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`30.
`
`The Debtors offer certain Employees long-term incentive awards (“Incentive
`
`Pay”) in the form of cash awards, based on the Company’s achievement of certain revenue and
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`EBITDA targets set on an annual basis (“Long-Term Incentive Program”). Incentive Pay
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`vests after two years and is generally subject to the applicable Employee’s continued
`
`10 Any description of the Employee Incentive Programs is for illustrative purposes only, is not intended to be a
`comprehensive recitation of all of the applicable terms and conditions, and is qualified in its entirety by the
`governing agreements.
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`11
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`Case 24-10628-KBO Doc 8 Filed 04/01/24 Page 12 of 48
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`employment by the Debtors through the effective period of the Long-Term Incentive Program.
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`Thirty-nine (39) non-Insider Employees participate in the Long-Term Incentive Program and are
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`eligible to receive Incentive Pay thereunder.
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`31.
`
`Each Employee participating in the Long-Term Incentive Program accepted a
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`letter offer that outlines the schedule of payments that each applicable Employee is entitled to
`
`receive. The Long-Term Incentive Program is an ordinary course program, and thus outside the
`
`scope of 11 U.S.C. § 503(c) that constitutes a substantial portion of participants’ overall
`
`compensation and are customary for the type of work performed by participating Employees.
`
`32.
`
`The next vesting date for the Long-Term Incentive Program is in May 2024, at
`
`which point approximately $612,879 in accrued Incentive Pay will become payable.
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`Additionally, the Debtors estimate that approximately $1,225,759 accrued in Incentive Pay will
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`become payable in May 2025. No payments under the Long-Term Incentive Program will be
`
`due and owing during the Interim Period and thus, the Debtors are not requesting that payments
`
`under the Long-Term Incentive Program be paid in the Interim Period.
`
`33.
`
`Of the thirty-nine (39) non-insider Employees entitled to Incentive Pay payable in
`
`May 2024, fifteen (15) non-Insider Employees are owed Incentive Pay in excess of the Priority
`
`Cap, in the aggregate amount of approximately $373,000. Of the thirty-nine (39) non-insider
`
`Employees that may be entitled to Incentive Pay payable in May 2025, thirty-five (35) are owed
`
`Incentive Pay in excess of the Priority Cap, in the aggregate amount of approximately
`
`$1,175,393. None have higher titles than Director and each Employee serves in a middle-
`
`management role for the Debtors. To each Employee, the Incentive Pay constitutes a substantial
`
`component of their overall ordinary course compensation, ranging from 21%-60% of the
`
`Employee’s yearly compensation. The Debtors do not seek permission to pay any obligations
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`12
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`Case 24-10628-KBO Doc 8 Filed 04/01/24 Page 13 of 48
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`arising from the Long-Term Incentive Program to Employees that are insiders (as such term is
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`defined in section 101(31) of the Bankruptcy Code).
`
`34.
`
`By this Motion, the Debtors seek authority, pursuant to the Proposed Final Order,
`
`to pay prepetition amounts due on account of the Long-Term Incentive Program, including
`
`amounts above the Priority Cap (i.e., the Non-Insider Employee Cap Exception), in the ordinary
`
`course of business and consistent with the Debtors’ prepetition policies, agreements, and
`
`practices. Failing to satisfy ordinary course obligations with respect to the Long-Term Incentive
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`Program would have an adverse impact on morale to the detriment of the Debtors’ continued
`
`operations.
`
`ii.
`
`35.
`
`Non-Insider Annual Incentive Bonus
`
`The Debtors offer certain Employees short term incentive awards in the form of
`
`cash awards (the “Annual Incentive Bonus”), based on annual targets and performance
`
`depending on the individual Employee’s role, as set forth in the Employee Contracts. An
`
`Employee is only entitled to payments on account of the Annual Incentive Bonus if such
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`Employee is still employed by the Debtors on the applicable payment date. The terms and
`
`conditions of the Annual Incentive Bonus are outlined in the applicable Non-Insider Contracts.
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`The Annual Incentive Bonus is an ordinary course program, and thus outside the scope of 11
`
`U.S.C. § 503(c), that constitutes a substantial portion of the participants’ overall compensation
`
`and are customary for the type of work performed by participating Employees. The Annual
`
`Incentive Bonus ranges from 6%-25% of an Employee’s expected overall annual compensation.
`
`The Debtors do not seek permission to pay any obligations arising from the Annual Incentive
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`Bonus to Employees that are insiders (as such term is defined in section 101(31) of the
`
`Bankruptcy Code).
`
`13
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`Case 24-10628-KBO Doc 8 Filed 04/01/24 Page 14 of 48
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`36.
`
`As of the Petition Date, the Debtors believe non-insider Employees have earned
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`approximately $1,090,765 on account of the Annual Incentive Bonus that has not yet been paid
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`to the applicable Employees. On average, this is less than $1,000 per Employee entitled to
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`receive the Annual Incentive Bonus. However, three (3) Employees are owed an Annual
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`Incentive Bonus in excess of the Priority Cap, in the aggregate amount of approximately
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`$51,000. By this Motion, the Debtors seek authority, but not direction, to pay (i) during the
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`Interim Period, prepetition Annual Incentive Bonus in a gross aggregate amount of
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`approximately $1,090,765, up to the Priority Cap as to each employee, and (ii) pursuant to the
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`Final Order, to pay prepetition amounts on account of the Annual Incentive Bonus in the
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`ordinary course, including those arising prepetition in excess of the Priority Cap (i.e., the Non-
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`Insider Employee Cap Exception), consistent with the Debtors’ prepetition policies, agreements,
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`and practices. Failing to satisfy ordinary course obligations with respect to the Annual Incentive
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`Bonus would have an adverse impact on morale to the detriment of the Debtors’ continued
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`operations.
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`D.
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`Deductions and Withholding Obligations
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`37.
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`During each applicable pay period, the Debtors routinely deduct certain amounts
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`from Employees’ paychecks, including, without limitation, certain pre-tax and after-tax
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`deductions payable to certain of the benefit plans discussed herein, such as an Employee’s share
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`of health care benefits, retirement contributions, unemployment benefits, legally ordered
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`deductions, and other miscellaneous deductions, including the Pension Withholdings (as defined
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`below) and union dues (collectively, the “Deductions and Withholding Obligations”). All
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`Deductions and Withholding Obligations are forwarded to third-party payees.
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`38.
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`In Chile, employees are statutorily required to contribute approximately 11% of
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`their monthly taxable income, subject to specific monthly caps (the “Pension Withholdings”) to
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`Case 24-10628-KBO Doc 8 Filed 04/01/24 Page 15 of 48
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`the respective Administradoras de Fondo de Pensiones (the pension fund administrators that
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`invest and manage funds on behalf of employees) (each, an “AFP”), in addition to voluntary
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`contributions that the Employee chooses.
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`39.
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`In addition, certain of the Employees are unionized. In exchange for benefits
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`under the relevant CBA, Union Employees are required to pay membership dues to the Unions.
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`The cost of such membership dues is deducted from each Union Employee’s wages and are paid
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`directly to the applicable Union once per month. As such, the Debtors collect approximately
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`$500 per month from all Union Employees’ wages and remit such amounts to the unions.
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`40.
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`As of the Petition Date, the Debtors estimate that approximately $794,898 in
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`prepetition Deductions have been deducted from the Wages but have not yet been remitted.
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`Accordingly, the Debtors seek authority to continue deducting and remitting amounts to the
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`appropriate third parties in a manner consistent with their historical practice for any unpaid
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`Deductions that relate to the period prior to the Petition Date and on a postpetition basis to
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`continue the Deductions in the ordinary course of business, consistent with past practice.
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`E.
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`Payroll Taxes
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`41.
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`The Debtors are required by law to withhold from Employees’ wages amounts
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`related to, among other things, national, regional, and local income tax for remittance to the
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`appropriate taxing authority, such as the Chilean Servicio de Impuestos Internos (the Internal Tax
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`Agency) (such taxes, the “Payroll Taxes”). The Payroll Taxes are generally processed and
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`forwarded to the appropriate taxing authority on the 13th day of the month, following the
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`disbursement of Employees’ payroll.
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`42.
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`On average, the Debtors pay and remit approximately $210,00 per month on
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`account of Payroll Taxes. As of the Petition Date, the Debtors estimate that the aggregate
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`amount of accrued but unpaid Payroll Taxes is approximately $206,122.45. Accordingly, the
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`Case 24-10628-KBO Doc 8 Filed 04/01/24 Page 16 of 48
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`Debtors seek authority to remit any unpaid Payroll Taxes to the appropriate taxing authority and
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`to continue to honor and process the unpaid Payroll Taxes on a postpetition basis in the ordinary
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`course of the Debtors’ business, consistent with past practices.
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`F.
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`Payroll Processing Fees
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`43.
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`The Debtors use BUK and KPMG Auditores Consultores SPA as their third-party
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`payroll processors (together, the “Payroll Processors”) to support global payroll processing,
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`payroll tax calculations and filings, and other payroll-related services for two payroll systems (all
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`such costs, collectively, the “Payroll Processing Fees”). The Debtors estimate that, as of the
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`Petition Date, they will owe approximately $13,257.22 on account of services rendered prior to
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`the Petition Date. The Debtors plan to continue their use of the Payroll Processors for payroll
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`administration and during the pendency of the Chapter 11 Cases, and the Debtors seek authority
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`to honor prepetition amounts owed to the Payroll Processor to ensure continued access to the
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`Payroll Processors’ services during the Chapter 11 Cases.
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`G.
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`Expense Programs
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`44.
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`In the ordinary course of business, the Debtors routinely reimburse Employees for
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`certain expenses incurred within the scope of their employment, including expenses for travel,
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`lodging, ground transportation, meals, business entertainment, and other miscellaneous business
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`expenses (collectively, the “Expense Reimbursements”). The Debtors maintain company-paid
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`credit cards for business-related expenses (the “Corporate Credit Cards” and together with the
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`Expense Reimbursements, the “Expense Programs”). Most of the