A recent ruling in the ongoing Lehman Brothers bankruptcy case serves as an important reminder about the risks of deferred compensation.
The ruling, issued by Judge Shelley C. Chapman of the U.S. Bankruptcy Court for the Southern District of New York, involved employee claims for payment of deferred compensation under the Lehman Brothers’ (formerly known as Shearson Lehman Brothers) deferred compensation plan. The plan provided that employee claims would be subordinate to those of all other present and future creditors of the plan sponsor.
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