Reuters: Bankruptcy News: UPDATE 1-ResCap eyes up to $17.8 mln bankruptcy bonuses, payouts

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UPDATE 1-ResCap eyes up to $17.8 mln bankruptcy bonuses, payouts Jul 18th 2012, 21:49 Wed Jul 18, 2012 5:49pm EDT * $4.1 mln sought for executives, $10.8 mln for others * Executive bonuses could rise to $7 million * ResCap says payouts needed to preserve value * Hearing set for Aug. 8 By Jonathan Stempel July 18 (Reuters) - Residential Capital LLC, the bankrupt mortgage lending unit of Ally Financial Inc, has asked a judge for permission to pay as much as $17.8 million of bonuses and incentive payments to hold onto 191 key employees. The request came even though ResCap's parent, an auto lender once known as GMAC, still owes about two-thirds of its $17.2 billion of federal bailout money, after accounting for a $134 million dividend payment announced on Wednesday. According to a Tuesday night court filing, ResCap said $4.1 million of the payout would go to 17 senior executives, a sum that could rise to $7 million depending on their success in selling assets. ResCap said another $10.8 million would be made available to 174 key employees. Chief Executive Thomas Marano would not be eligible because Ally still holds bailout money from the Troubled Asset Relief Program. These recipients together comprise roughly 5 percent of ResCap's 3,625-person workforce. ResCap said the payouts would help motivate recipients, maximize the value of the company, encourage executives to assist in restructuring and sale duties, and insure that employees with "irreplaceable knowledge" do not leave. It is common for companies in bankruptcy to seek permission for incentive payouts to key employees. A hearing to approve ResCap's proposed payout is scheduled for Aug. 8 before U.S. Bankruptcy Judge Martin Glenn in Manhattan. Objections are due on Aug. 1. Once part of General Motors Corp, Ally on Wednesday said it will have paid the U.S. Treasury about $5.7 billion since February 2009, including the $134 million dividend payment. Taxpayers own about 74 percent of Ally, which did not file for bankruptcy. Ally put ResCap into Chapter 11 on May 14 as a means of addressing the unit's mortgage-related liabilities. ResCap is selling assets that it hopes will fetch nearly $4 billion for creditors, it said. Nationstar Mortgage Holdings Inc, a unit of Fortress Investment Group LLC, will be the opening bidder for ResCap's mortgage lending and servicing business. Warren Buffett's Berkshire Hathaway Inc will make the first offer for a ResCap loan portfolio. The case is In re Residential Capital LLC, U.S. Bankruptcy Court, Southern District of New York, No. 12-12020. Link this Share this Digg this Email Reprints

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