Judge approves nearly $500,000 in LandAmerica bonuses

A handful of employees still working at LandAmerica Financial Group Inc., a one-time Fortune 1000 company, could get a total of nearly $500,000 in incentive bonuses as the firm winds down operations.

Approved yesterday in U.S. Bankruptcy Court in Richmond, the plan identifies 17 "key" employees who would be eligible for extra money if they meet certain goals, such as selling off subsidiaries, closing businesses down, or meeting tax-filing requirements.

"This group has been working harder than ever before, but their benefits have been reduced," said McGuireWoods attorney Dion W. Hayes, who represents the Henrico County company. "They're essentially working their way out of a job."

Without them, Hayes said, the former title insurer would be forced to seek outside help and pay hourly fees, which would increase costs to the estate.

No one spoke in opposition to the plan, which was approved by Judge Kevin R. Huennekens.

The bonuses are not uncommon when a company is in bankruptcy, said Nathan B. Oman, an assistant law professor at the College of William and Mary.

"You don't want a situation when you've got a company [in bankruptcy] and a lot of the value is tied up in this specialized knowledge current employees have," Oman said.

Other local companies have offered or want to offer similar bonuses.

In February, the bankrupt Circuit City Stores Inc. won the right to bestow as much as $4 million in retention bonuses to more than 150 top executives, managers and other employees. The Henrico-based consumer-electronics retailer liquidated and closed its last store in March.

On Monday, a judge in U.S. Bankruptcy Court in Delaware will hear a request from Qimonda Richmond to give 46 employees up to $1.24 million in combined incentives. The memory-chip manufacturer declared bankruptcy Feb. 20 and is in the process of idling its Sandston plant in eastern Henrico.

Also yesterday, a request to hire a law firm to investigate and pursue litigation regarding the marketing of auction-rate securities and the firms that sold them to LandAmerica was continued until July.

The securities were marketed as highly liquid investments that earned interest, but the market for them stalled in February 2008.

LandAmerica blames its need to file bankruptcy in large part to the failure of the auction-rate securities market.

Contact Emily C. Dooley at (804) 649-6016 or .