Hawker Beechcraft’s request to award up to $5.3 million in bonuses to company executives remains a focus before the U.S. bankruptcy court as the machinists’ union reiterates its opposition and the company continues to maintain that the bonuses are necessary given the difficulties of the executives’ current tasks.

The court late last month awarded a portion of the company’s request for additional executive compensation, but withheld a ruling on the most controversial of the requests to distribute up to $5.3 million in bonuses under the Key Employee Incentive Plan (KEIP).

Hawker Beechcraft in July requested court approval for KEIP, drawing a formal objection from the International Association of Machinists and Aerospace Workers (IAM). IAM Aerospace Coordinator Ron Eldridge released a statement that said, “The attempt to implement such a lucrative bonus program for the very executives who led Hawker Beechcraft into bankruptcy is particularly outrageous after thousands of Hawker employees have already lost their jobs and thousands more could lose jobs and pension benefits.”

Hawker Beechcraft defended the program, saying payments would not be made unless the senior leadership team meets performance targets, and added that the achievement of those benchmarks is “far from a foregone conclusion.”

The IAM this week continued its objection, stating in a new filing that the company already increased compensation for the senior leadership team in the first quarter – a time when the company also eliminated about 800 factory and shop positions. “The KEIP is a disguised retention plan that fails to satisfy the strict criteria found in section 503(c)(1) of the Bankruptcy Code that apply to post-petition retention programs for insiders,” the IAM says.

Even if the court believes KEIP is incentive motivated, it is not a sound exercise of business judgment because “it seeks to provide bonuses that are unnecessary, unreasonable, excessive, discriminatory and not consistent with industry standards,” the IAM says, adding the court should deny the request.

The Office of the U.S. Trustee for the Southern District of New York, meanwhile, also weighed in, noting the bankruptcy code sets a high hurdle if payments are designed for retention, including that the payments meet a strict monetary test, the individuals are essential to the survival of the business and that they have a job offer at the same or greater rate of compensation.

As an incentive plan, the trustee argues, the company failed “to demonstrate that the ‘incentive’ plans seek to reward the achievement of challenging results.”

But in its own filing on Aug. 6, Hawker Beechcraft defended the program, saying KEIP is not meant as a “disguised retention plan” that did not meet bankruptcy law requirements under Section 503(c)(1), but is rather a plan to provide incentives to meet certain targets.

Hawker Beechcraft argues the court should find that KEIP “constitutes a reasonable exercise of the debtors’ business judgment,” particularly since the senior leadership team must prepare potential paths for the company.

These include either sale of the company or preparation to move the company forward as a standalone business as outlined under the company’s preliminary reorganization plan filed in late June – all the while managing day-to-day operations.

The company argues the court should conclude that the senior leadership team members “are indispensable to the debtors’ efforts to have the business perform to its full potential over the next few months, while at the same time driving the successful implementation of the standalone transaction or the third-party transaction.”