New Century execs won’t be allowed to handle bankruptcy

If you're new here, you may want to subscribe to my RSS feed. Thanks for visiting!

From the LA Times on Orange County’s mortgage meltdown poster-child:

The Justice Department has taken the unusual step of asking a bankruptcy judge to oust New Century Financial Corp.’s top managers and board members, and replace them with an appointed trustee.

Directors and executives of the collapsed Irvine-based lender "failed to fulfill their fiduciary roles" by not ensuring that adequate accounting and financial controls were in place last year, according to a motion filed Tuesday in U.S. Bankruptcy Court in Delaware by Joseph J. McMahon Jr., a lawyer with the Justice Department’s Office of the Trustee. …

Existing management typically is allowed to steer a company through bankruptcy, making Tuesday’s filing highly unusual, bankruptcy experts said.

I think this is a great idea. Especially since the executives wrote the following in to their creditor-payoff plan as part of the BK:

The company seeks to pay Chief Executive Morrice and seven other officials $3.5 million if they find buyers for its main assets. Some 120 other employees would get just less than $3 million whether or not the assets sold. A hearing on the bonuses is slated for April 24.

What a joke! They wiped out millions of shareholder dollars, laid off a ton of people and they want $3.5 million to divvy up what’s left of the place? LAUGHABLE MAN, LAUGHABLE.