Jan 11 A plan by Residential Capital LLC, the
bankrupt mortgage lending unit of Ally Financial Inc, to pay up
to $33.4 million in annual bonuses to about 3,000 of the
company's 3,926 employees drew an objection from a U.S.
U.S. Trustee Tracy Hope Davis, who represents the Justice
Department, said in court papers that the annual incentive plan
could not be characterized as being part of ResCap's ordinary
course of business since it entered bankruptcy protection with
the intention of selling its servicing platform and loans.
The plan includes senior executives other than the company's
chief executive, president and chief capital markets officer.
In August, a federal bankruptcy judge rejected the company's
plan to pay incentive bonuses to 17 senior executives, saying
the payouts were aimed at retaining them, not to compensate for
increased responsibilities or performance, as required by
bankruptcy law. An amended bonus plan, based on more ambitious
performance metrics, was approved in October.
Davis said the decision to pay bonuses to employees who are
not covered under the incentive and retention bonus plans could
rest with a committee of unsecured creditors to determine
whether such payments were justified.
ResCap filed for Chapter 11 bankruptcy protection on May 14
to address mortgage-related liabilities. U.S. taxpayers own
about 74 percent of Ally, which was once part of General Motors
Corp. Ally did not file for court protection.
The case is In re: Residential Capital LLC, U.S. Bankruptcy
Court, Southern District of New York, No. 12-12020.