First Guaranty’s employee bonus plans draw objection from committee

By Sarah Lizee

Olympia, Wash., Aug. 1 – First Guaranty Mortgage Corp.’s official committee of unsecured creditors objected to the company’s proposed key employee incentive and retention plans, according to a filing with the U.S. Bankruptcy Court for the District of Delaware.

The committee said the incentive plan fails to meet the requirements of bankruptcy code “even at the most basis levels.”

The group said the incentive plan is actually retentive and doesn’t incentivize the participants to do anything other than close loans without any regard to the economic impact on the estates of those loan transactions.

“The KEIP does little more than reward the KEIP participants for remaining employed and completing tasks that are included in their job descriptions,” the committee said.

The committee also called the plans excessive because together they provide up to $3 million for winding down the cases, without ensuring any value is gained by the estates as a result of the transactions, or requiring that a distribution be made to the debtors’ creditors.

The Plano, Tex.-based mortgage lender filed Chapter 11 bankruptcy on June 30 under case number 22-10584.

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