First Guaranty Mortgage Corp. is proposing millions of dollars in bonuses for executives and staff to meet winddown goals as the company mulls additional layoffs and workers are quitting, the firm disclosed.
The Plano, Texas-based lender has 124 remaining employees and is contemplating reductions in force Aug. 15 and in mid-September, according to a filing Wednesday in the U.S. Bankruptcy Court for the District of Delaware. Since FGMC
The firm in consultation with one of its debtor-in-possession financiers, parent company PIMCO, said it’s developed a bonus program to incentivize remaining employees to continue to fund, close and sell remaining loans, maintain technology and cybersecurity and close branches, among other operations.
Six FGMC executives could receive combined bonuses exceeding $3.2 million on top of their combined $2.4 million base salaries if they meet specific pipeline resolution and wind down goals over the next four months, according to a filing. The remaining staff, should they stay with the company, are eligible to receive $1.4 million for the similar benchmarks. The program is pending a judge’s approval in an Aug. 2 hearing.
The lender in a statement Thursday acknowledged the bonus program and did not specify how many employees it expects to keep to complete loan closings for current customers.
“From the outset, one of the Company’s primary goals was to protect borrowers in the pipeline and allow them to move forward with their transactions,” a company spokesperson said. “The Company is closing as many of these transactions as possible and also helping to facilitate closings at other lenders, should the customer decide that another route is best for them.”
The firm, which owes its warehouse lenders approximately $418 million, has already been granted by a judge $175 million in debtor-in-possession financing from both PIMCO and Barclays Bank to fund loans already in its pipeline, according to court documents.
Customers Bank, which holds FGMC’s largest unsecured claim of $25 million, also reached an agreement for FGMC to hold servicer payments from Rushmore Loan Management Services into a separate account to satisfy Customers’ cash collateral. The Customers agreement will be heard by a judge in a hearing next Thursday.
The embattled lender also revealed it engaged with advisory firm FTI Consulting for a potential restructuring on June 6, over two weeks before FGMC laid off nearly 80% of its workforce, CEO Aaron Samples wrote in a Monday filing. In the month preceding the bankruptcy filing, FGMC paid FTI just under $2 million for its services, including its $500K retainer.
FGMC also defended itself against three class action complaints from employees fired in
A plan for either reorganization or liquidation will be filed in the third or fourth quarter of this year, FGMC disclosed.
