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Despite opposition from the U.S. Trustee in the Residential Capital LLC bankruptcy case, a judge has ruled that millions of dollars can be paid to executives.
A debtors’ motion for an order pursuant to sections 363(b) and 503(c)(3) of the bankruptcy code was filed by ResCap.
The debtors are seeking authorization to implement a pair of incentive plans covering eight insiders and a retention plan covering 155 non-insider employees.
The bankrupt company sought authorization to pay $7.8 million in bonuses to the employees.
However, nearly half of the bonuses will be paid to just the eight insider employees, while the other half will go to the non-insider employees.
The U.S. Trustee in the ResCap bankruptcy opposed the motion. The trustee argues that the debtors have failed to meet their burden of showing that the key employee incentive plan payments are primarily incentivizing rather than retentive.
The trustee wants detailed information on the amount being paid to each individual employee.
But on April 12, the bankruptcy court overruled the trustee’s objection and approved the employee incentive plans.