U.S. Opposes ResCap Bonus Plan

U.S. Opposes ResCap Bonus Plan

The U.S. Government is objecting to a proposal by Residential Capital to pay roughly $33.4 million in annual bonuses to employees.

ResCap, the subprime mortgage unit of Ally Financial that has operated under bankruptcy protection since May, asked the court on Dec. 26 to authorize the company to pay the awards to roughly 3,000 of its 3,926 employees from funds the company has set aside.

“Providing employees with an annual discretionary payment that has historically comprised a portion of their annual compensation is a normal component of conducting business and essential to conducting the debtors’ businesses, which rely heavily on consistent leadership, familiarity with complex financial assets, and regular interaction with sophisticated governmental agencies,” lawyers for ResCap wrote in papers filed with the U.S. Bankruptcy Court in Manhattan.

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