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Full title: Objection to Claim Number 12 by Claimant James Mac Hale Filed by Debtor Wave Computing, Inc.. (Attachments: # 1 Declaration of Julie Rome-Banks In Support Thereof # 2 Declaration of Desi Banatao In Support Thereof) (Rome-Banks, Julie) (Entered: 08/25/2021)
Document posted on Aug 24, 2021 in the bankruptcy, 6 pages and 0 tables.
Bankrupt11 Summary (Automatically Generated)
In his letter to Mr. Banatao, Mr. MacHale asserts that 4 “bookings and revenue did occur during this period of employment”, 5 however the MacHale Claim includes no specific information as to 6 the “bookings and revenue” that Mr. MacHale’s letter is referring to. The first quarter of Mr. MacHale’s incentive 5 compensation of $25,000 was guaranteed by Wave and was 6 previously paid by Wave to Mr. MacHale, which fact is admitted on 7 page 5 of the MacHale Claim.In short, Mr. MacHale as the Vice President of Asia Sales 11 was expected to generate new sales for Wave.To be entitled to wage priority, such unpaid 21 compensation must have been earned by Mr. MacHale within the 22 180-day period preceding the Petition Date and the statutory 23 maximum for compensation earned in such time period is 24 $13,650.00. Given that Mr. MacHale’s bi-monthly salary 8 compensation was previously paid by Wave along with the first 9 quarter of incentive compensation, there is no additional 10 compensation owed to Mr. MacHale by Wave that was earned durin11 the priority wage period.
List of Tables
Document Contents1 BINDER & MALTER, LLP Michael W. Malter (SBN 96533) 2 Robert G. Harris (SBN 124678) Julie H. Rome-Banks (SBN 142364) 3 2775 Park Avenue, Santa Clara CA 95050 4 Telephone: 408.295.1700 Facsimile: 408.295.1531 5 Email: firstname.lastname@example.org Email: email@example.com 6 Email: firstname.lastname@example.org 7 Attorneys for the Reorganized Debtors 8 UNITED STATES BANKRUPTCY COURT 9 NORTHERN DISTRICT OF CALIFORNIA 10 SAN JOSE DIVISION 11 In re: Case No. 20-50682 (MEH) 12 WAVE COMPUTING, INC., et al., Chapter 11 (Jointly Administered) 13 Debtors.1 14 NO HEARING UNLESS REQUESTED 15 16 OBJECTIONS TO CLAIM OF JAMES MACHALE 17 TO AFFECTED CLAIMANT: JAMES MACHALE (Claim #12) 18 WAVE COMPUTING, INC., the Reorganized Debtor and Debtor-in-Possession 19 (“Wave” or “Debtor”) hereby objects to the Proof of Claim that has been filed by claimant 20 JAMES MACHALE described below and request that said claim be disallowed in its 21 entirety: 22 /// 23 /// 24 1 The Debtors in these chapter 11 cases, along with the last four digits of eac25 Debtor’s federal tax identification number, as applicable, are: Wave Computing, Inc. (4264MIPS Tech, Inc. (8247), Hellosoft, Inc. (8640), Wave Computing (UK) Limited (None26 Imagination Technologies, Inc. (6967), Caustic Graphics, Inc. (7272), and MIPS Tech, LL(2161) (collectively the “Debtors”). The Debtors’ mailing address is 3201 Scott Blvd, Sant27 Clara, CA 95054. 28
11 1. The Debtors each filed a voluntary petition under chapter 11 on April 27, 2 2020 (“Petition Date”). The cases were ordered jointly administered by order entered on3 May 1, 2020 (docket #50) with Wave Computing, Inc. as the lead case. Donlin Recano 4 was appointed as the claims, noticing and solicitation agent on behalf of the Debtors by 5 order entered on May 1, 2020 (docket #54). 6 2. The Debtors confirmed a Sixth Amended Plan of Reorganization by order o7 this Court entered on February 16, 2021 (the “Plan”) (see docket #1172). The Plan 8 became effective on February 26, 2021 (see docket #1227). 9 3. JAMES MACHALE: Wave objects to Claim #12 filed by JAMES MACHAL10 (“Mr. MacHale” or “MacHale”), which proof of claim was filed with the Court on May 25, 11 2020 in the case of Wave Computing, Inc., in the amount of $75,000.00 as a priority 12 wage claim (the “Claim”)2. Wave objects3 to the MacHale Claim for the following 13 reasons: 14 A. A true and correct copy of the MacHale Claim is attached as Exhibit 15 “A” to the Declaration of Julie H. Rome-Banks filed concurrently 16 herewith and is incorporated herein by reference. The only 17 documents attached in support of the MacHale Claim are two letters18 both apparently prepared by Mr. MacHale. The first letter bears a 19 2 The MacHale Claim was also filed with Donlin Recano, the appointed claims and20 noticing agent in these cases, and was assigned claim #16 on the Donlin Recano claimsregister. 21 3 Prior to confirmation of the Plan, Debtors’ appointed bankruptcy counsel Sidley 22 Austin LLP filed the DEBTORS’ AMENDED FIFTH OMNIBUS OBJECTION TO CERTAIN PROOFS OF CLAIMS (RECLASSIFIED CLAIMS) (the “Omnibus Objections”)23 and therein objected to the MacHale Claim by requesting reclassification thereof to the 24 extent the entire MacHale Claim was filed as a priority wage claim. The Court ruled at an interim hearing held on February 25, 2021 that the maximum wage and commission 25 priority portion of the MacHale Claim was $13,650.00 with the balance an unsecured non-priority claim. The Omnibus Objections did not assert substantive objections to the 26 MacHale Claim, which were expressly preserved. The substantive objections to the MacHale Claim are the subject of this pleading and the declarations filed in support 27 thereof. 28
21 date of May 25, 2020 and is addressed to the Court and the second 2 bears a date of May 10, 2020 and is addressed to Mr. Desi Banatao3 of Wave. In his letter to Mr. Banatao, Mr. MacHale asserts that 4 “bookings and revenue did occur during this period of employment”, 5 however the MacHale Claim includes no specific information as to 6 the “bookings and revenue” that Mr. MacHale’s letter is referring to. 7 B. I am informed and believe that Wave did not schedule any pre-8 petition claim on behalf of Mr. MacHale because Wave’s books and 9 records reflected that Mr. MacHale had been paid all compensation 10 owed to him as of the date of bankruptcy. 11 C. Mr. MacHale was employed by Wave as Vice President, Asia Sales,12 pursuant to a written offer of employment dated March 20, 2019. Mr13 MacHale accepted the offer of employment from Wave by 14 countersigning that offer of employment on or about March 25, 201915 and indicating he would report to work on April 2, 2019. Mr. 16 MacHale’s first day of employment was actually April 9, 2019. A tru17 and correct copy of Mr. MacHale’s executed employment letter is 18 attached as Exhibit “A” to the Declaration of Desi Banatao filed in 19 support hereof and incorporated herein by reference (the “Banatao 20 Declaration”). Page two of the executed employment letter from Mr. 21 MacHale did not scan properly into Wave’s electronic files and as a 22 result is difficult to read. Therefore, also included with Exhibit “A” is 23 the original electronic version of the offer of employment letter with 24 Mr. MacHale that is saved in Mr. MacHale’s personnel file. Notably,25 Mr. MacHale did not include a copy of his executed employment 26 letter when filing the MacHale Claim with the Court. 27 /// 28 ///
31 D. Mr. MacHale’s compensation with Wave consisted of a semi-monthl2 salary of $8,333.33 per pay period for an annual gross salary of 3 $200,000 together with quarterly incentive compensation of $25,0004 per quarter or more. The first quarter of Mr. MacHale’s incentive 5 compensation of $25,000 was guaranteed by Wave and was 6 previously paid by Wave to Mr. MacHale, which fact is admitted on 7 page 5 of the MacHale Claim. To be eligible for future quarterly 8 incentive compensation, Mr. MacHale need to meet performance 9 requirements associated with his position as Vice President, Asia 10 Sales. In short, Mr. MacHale as the Vice President of Asia Sales 11 was expected to generate new sales for Wave. 12 E. During the time of his employment from approximately April 9, 2019 13 through the day he was laid off by the Debtor on March 6, 2020 as 14 part of a general reduction in force, Mr. MacHale did not perform his15 duties as Vice President, Asia Sales so as to be entitled to incentive16 compensation after his first quarter of employment. Specifically, the17 chart attached as Exhibit “B” to the Banatao Declaration illustrates 18 the sales that Mr. MacHale achieved during the period of his 19 employment. Mr. MacHale was responsible for a single customer 20 sale that was billed to the customer on November 19, 2019 for 21 $21,250.00. Other sales during the 11 month time period were the 22 result of pre-existing customer relationships brought in by other 23 Wave sales personnel, or new sales generated by other Wave 24 personnel including members of Wave’s management team. 25 F. As noted above, Mr. MacHale generated one sale for $21,250.00 to 26 a Wave customer on December 19, 2019. This single sale was 27 greatly insufficient to entitle Mr. MacHale to any incentive 28 compensation from Wave. Accordingly, the MacHale Claim for
41 $75,000 representing three quarters of incentive compensation was 2 not earned by Mr. MacHale and the MacHale Claim should be 3 disallowed. 4 G. As noted above, Mr. MacHale failed to attach any documents in 5 support of the MacHale Claim save an except for two letters which 6 he prepared. Neither of these letters identifies any specific custome7 or sale transaction that Mr. MacHale generated for the benefit of 8 Wave during the term of his employment. This failure to attach 9 supporting documents to his Claim has the legal effect of rendering 10 the MacHale Claim lacking in prima facie validity pursuant to 11 Fed.R.Bank. Proc. 3001(f). Mr. MacHale as a creditor bears the 12 ultimate burden of proving his claim. See generally, In re 13 Consolidated Pioneer Mortgage, (9th Cir. BAP 1995) 178 B.R. 222, 14 aff’d 91 F.3d 151 (9th Cir. 1996). 15 H. The Court previously ruled that the maximum wage priority claim tha16 Mr. MacHale was entitled to receive was $13,650.00 pursuant to 1117 U.S.C. §507(a)(4). In making its ruling however, the Court did not 18 rule on the merits of Mr. MacHale’s claim, but rather only on the 19 statutory limits of a priority wage claim as to both amount and 20 qualifying time period. To be entitled to wage priority, such unpaid 21 compensation must have been earned by Mr. MacHale within the 22 180-day period preceding the Petition Date and the statutory 23 maximum for compensation earned in such time period is 24 $13,650.00. Any claim of Mr. MacHale that did not qualify for wage 25 priority, if proven, would be a general unsecured non-priority claim. 26 I. The right to incentive compensation must have been earned by Mr. 27 MacHale between October 31, 2019 and March 6, 2020 by achievin28
51 new sales during that time period4. Mr. MacHale has provided no 2 evidence that he generated any new sales for Wave during that 1803 day period. As noted above, the single sale by Mr. MacHale in 4 December 2019 was not sufficient to qualify Mr. MacHale for any 5 incentive compensation for that quarter and Mr. MacHale was 6 already paid his guaranteed incentive compensation for his first 7 quarter of employment. Given that Mr. MacHale’s bi-monthly salary 8 compensation was previously paid by Wave along with the first 9 quarter of incentive compensation, there is no additional 10 compensation owed to Mr. MacHale by Wave that was earned durin11 the priority wage period. Accordingly, any request by Mr. MacHale 12 for a priority wage claim should be denied. 13 4. Wave reserves the right to amend these objections to state additional, 14 substantive grounds for objecting to the MacHale Claim described herein, should a 15 response to these Objections be filed. 16 WHEREFORE, the Wave prays as follows: 17 A. That Claim number 12 of James MacHale filed in the amount of $75,000.018 be disallowed in its entirety; and, 19 B. For such other and further relief as the Court deems just and proper. 20 Dated: August 25, 2021 BINDER & MALTER, LLP 21 22 By: /s/ Julie H. Rome-Banks Julie H. Rome-Banks 23 Attorneys for Reorganized Debtors 24 25 4 October 31, 2019 is the 180th day prior to the April 27, 2020 Petition Date. Marc26 6, 2020 was Mr. MacHale’s last day of employment with Wave. Therefore, the pertinent period during which Mr. MacHale would have needed to earn wages for those wages to 27 be entitled to priority was from October 31, 2019 to March 6, 2020. 28