In less than a half hour, this morning's Borders hearing ended with the court's approval of a modified plan for both the Key Employee Incentive Plan, or KEIP, for five senior managers and 10 additional managers, and the Key Employee Retention Plan, or KERP, which covers 25 critical employees.

Under the new KEIP plan, which was worked out earlier in the week by Borders's attorneys, the U.S. Trustee, and the Creditors Committee, the 10 would earn 40% of base pay if a qualifying transaction—sale of Borders as an ongoing concern or a reorganization plan—is approved by November 16. To be eligible to receive the bonus, the 10 first need generate either $10 million in rent reduction in 2011 and another $10 million in 2012 or $10 million in cost reductions by June 30, achieved not through headcount reductions.

Top executive could earn bonuses of 75% of base pay if a qualifying transaction is approved by August 15; 55% by November 16. Additional bonus money is tied to the transaction enabling creditors to recover $73 million, $85 million, or $95 million and up. The cost, according to Borders's attorney, would be the same or equal to that of the original plan, 0.56% of Borders's expected revenue.

In approving the plan, Judge Martin Glenn of U.S. Bankruptcy Court in New York restated his concern for the well fare of Borders's 11,000 full and part-time employees, which he expressed at last week's hearing on the bonus plan. "Continued employment of this workforce depends on a successful sale or reorganization," he said. "The court believes it's enhanced by the debtor's ability to sustain an experienced workforce."

However, industry insiders doubt that either the KEIP or KERP will take effect. They claim that Borders is burning through more money than anticipated and that GOB sales were propping up its "better than expected" sales claims. At least one executive questioned whether GE will pull its DIP loan based on revised sales.