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Tentative agreement: Ally to pay $49 million to ResCap and Ally execs
By Jim Witters
Wilmington, Del., Aug. 1 - Ally Financial Inc. has agreed to pay $49 million in prepetition compensation to Ally and Residential Capital, LLC executives, according to documents filed Aug. 1 with the U.S. Bankruptcy Court for the Southern District of New York.
The executives were promised deferred compensation as a result of restrictions implemented when Ally received money through the federal Troubled Asset Relief Program.
In a statement filed with the court, Ally outlined a tentative agreement with its affiliate ResCap in which Ally will pay
• About $25.3 million to employees of ResCap who were employed by ResCap at the time the TARP money was issued;
• About $1.2 million to those employed by ResCap when the TARP compensation was issued but who were terminated by ResCap before the bankruptcy filing; and
• About $22.5 million to employees of ResCap who were employed by Ally at the time the TARP funds were issued.
In exchange, Ally is to receive a release from ResCap and the employees.
Ally also agreed to support the implementation of a ruling by the U.S. Department of the Treasury's Office of the Special Master that would accelerate payment of some TARP compensation.
ResCap is to reimburse Ally about $9 million.
The tentative agreement is under discussion with the official committee of unsecured creditors and the office of the U.S. Trustee.
Ally also is convinced ResCap's proposed employee retention and incentive plans comply with the TARP regulations, the statement said.
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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