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Peregrine Systems Inc. heads to bankruptcy court today for a hearing on the company’s plan to dole out millions of dollars in retention and bonus payments to senior executives. Creditors of the San Diego company object to the payment plan. “There’s a lot of work to do,” said Bruce Bennett, an attorney with Los Angeles-based Hennigan, Bennett & Dorman who is representing the Peregrine’s creditors committee. “But we’re confident we’ll have a solid evidentiary case.” The committee is challenging Peregrine’s plan to pay CEO Jeff Greenfield, Chief Financial Officer Ken Sexton and general counsel Kathy Vizas $1.8 million in restructuring bonuses and $5 million in retention payments to those three and 14 other senior executives. According to court documents, the committee contends Peregrine management misused funds to defend company board members from charges related to an August revenue restatement. Peregrine filed Sept. 22 for Chapter 11 bankruptcy protection, citing the financial and legal issues raised by its inability to file audited financial reports for fiscal years 2000 to 2002. In August the company said it overstated revenues by $250 million for that period. The company is under investigation by the Securities and Exchange Commission, Department of Justice and Congress in connection with the faulty bookings. Attorneys representing Peregrine, which makes software to help companies manage their information technology assets, did not return calls seeking comment. Peregrine plans to emerge from bankruptcy, and creditors are optimistic the company can eventually resume operations. “The committee believes Peregrine is a business that can be a good business and can continue to operate,” Bennett said. To that end, Peregrine recently agreed to sell its Remedy Inc. subsidiary to BMC Software Inc. of Houston for $350 million. The U.S. bankruptcy court in Delaware has yet to approve the deal. But another Peregrine creditor said he wants it to liquidate if the company’s management stays in place. “My concern is that they would take the business and run it into the ground and take executive salaries until there’s nothing left in the bank,” the creditor said. “You’re dealing with a company that’s been opaque in their accounting, since they haven’t filed anything since the fourth quarter of 2001 and their previous results were restated.” The creditor added that the committee can remove Peregrine’s leadership but said the court is unlikely to order liquidation if the company presents a viable reorganization plan that preserves the value of its assets. Copyright �2002 TDD, LLC. All rights reserved.

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