ResCap $11.3 million retention plan approved for 174 KERP employees

By Sahara Marte

New York, Aug. 9 - Residential Capital, LLC received approval for its key employee retention plan on Thursday during a hearing at the United States Bankruptcy Court for the Southern District of New York.

The company's proposed $4.6 million key employee incentive plan was taken under submission for "a couple of days" by judge Martin Glenn. But Glenn did approve incentive payments for the company's compliance counsel.

The retention plan will be funded with $11.3 million to make payments to 174 employees identified as non-insiders.

"I appreciate workers," said judge Martin Glenn. "Only non-insider employees will receive payment."

A hearing on the retention (KERP) and incentive (KEIP) plans was previously held on Aug. 8. Glenn said then that he needed more information before he could make a decision, specifically asking for salary data on the 17 insider positions.

As previously reported, Region 2 trustee Tracy Hope Davis had objected to the employee incentive plan, saying it was "a disguised retention plan, not an incentive plan, because it sets a low performance bar for employees to earn the proposed bonuses. It does not provide real incentives for the employees to improve their performance, work harder, and achieve results greater than in the past."

Residential Capital, a New York-based mortgage originator and servicer, filed for bankruptcy on May 14. The case number is 12-12020.

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