ResCap Offers Senior Executives $272,000 in Severance Pay
Residential Capital LLC, the bankrupt mortgage company indirectly owned by the U.S. government, asked a judge for permission to pay two unnamed senior executives $136,000 each in severance pay.
The company said the amounts comply with limits set in the U.S. Bankruptcy Code for payments to departing employees. One of the executives resigned May 3 after being with the company for three years and the other is a 20-year employee who may leave by the end of May.
Both men had been eligible for bonus payments approved last month by U.S. Bankruptcy Judge Martin Glenn in Manhattan. Under two bonus plans, the company may pay key workers as much as $7.8 million, with almost half the money going to eight top executives.
Had the men remained, they would have been “entitled to sums well in excess of the $136,000 cap,” the company said in court papers.
ResCap, based in New York, filed for bankruptcy in May 2012 with plans to sell most of its assets and resolve legal claims related to residential mortgage-backed securities. The company is owned by Detroit-based auto lender Ally Financial Inc. (ALLY), which is majority-owned by the U.S. government.
The case is In re Residential Capital LLC, 12-bk-12020, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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