By Akiko Matsuda

A judge approved 3M Co.'s bankruptcy earplug subsidiary Aearo Technologies LLC to pay employee wages, under the condition that the amount exceeding the bankruptcy code cap be paid by the parent company.

Chapter 11 allows bankrupt businesses to prioritize pre-petition wages of up to $15,150 per employee over other creditors. Aearo said because of the its employee incentive programs, wages owed to a handful of employees exceeded the cap.

Still, paying the amount in full is important to keep workers motivated, Aearo told Judge Jeffrey Graham with the U.S. Bankruptcy Court in Indianapolis.

The Justice Department's bankruptcy watchdog had opposed the request because it violates the law. The judge overruled the objection, allowing Aearo to pay up to the cap, with the rest to be paid by 3M, which is sponsoring the subsidiary's chapter 11 process.

Write to Akiko Matsuda at akiko.matsuda@wsj.com

(END) Dow Jones Newswires

September 14, 2022 17:41 ET (21:41 GMT)

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