The U.S. Trustee overseeing Blockbuster Inc's bankruptcy is asking a judge to stop the movie rental chain from paying one employee hundreds of thousands of dollars in bonuses to speed up creditor payouts.

In court papers filed late Friday in Bankruptcy Court in Manhattan, Trustee Tracy Hope Davis criticized Blockbuster for requesting an unquantified bonus payment, and said the plan benefits only senior creditors.

Blockbuster's plan would pay Bruce Lewis, the company's senior vice president of tax, a bonus equal to 1 percent of all creditor payouts, and 1.25 percent of payouts made by the end of July. The plan was proposed last month.

The trustee said Blockbuster failed to offer estimates of how much money that could ultimately amount to, but argued that it would essentially mean $125,000 in bonuses for every $10 million in July payouts, and additional bonuses for payments made after that.

Blockbuster, which went bankrupt last year in the face of competition from Netflix and other direct-to-consumer rental services, was sold to Dish Network Corp in April for about $320 million.

Lewis, in charge of winding down the company's operations, preparing its annual filings and finishing up the company's tax returns, is Blockbuster's only remaining employee, according to court papers filed by the movie retailer.

The trustee said the plan provides no incentive to find additional money for claimants whose recoveries are subordinate to those of senior creditors. The plan encourages Blockbuster to expedite payouts to senior creditors, potentially at the expense of the lower creditor class, the trustee said.

Where the funds will come from to pay these bonus payments is not disclosed, the trustee said in court papers. One possibility may be that the bonus will reduce the recovery on pre-sale administrative claims.

A spokesman for Blockbuster did not return a call Tuesday. An attorney for the company declined to comment. A representative for the trustee could not be reached.

A hearing on the matter has been scheduled for July 19.

The trustee has taken issue with Blockbuster's payment plans in the past.

Davis' office in June called on Judge Burton Lifland, who oversees Blockbuster's bankruptcy, to delay payment to its attorneys and advisers, saying the company had too little remaining value to risk immediate payment.

The trustee also questioned whether Blockbuster's attorneys, from law firm Weil Gotshal & Manges, could be compensated nearly $70,000 for work related to an initial restructuring plan that ultimately collapsed.

The case is in re: Blockbuster Inc, U.S. Bankruptcy Court, Southern District of New York, No 10-14997.

(Reporting by Nick Brown, editing by Matthew Lewis)