To: Knighty Tin who wrote (109177 ) 10/1/2007 2:23:27 AM From: Madharry Read Replies (1) | Respond to of 132070 You think you have problems? American Home Says It Warned Employees It Could Seize Savings Over Bankruptcy WILMINGTON, Del. (AP) -- American Home Mortgage Investment Corp. said it should be allowed to go after about $23 million of its employees' retirement savings because it gave them fair warning the money could be seized if the company sank into bankruptcy. ADVERTISEMENT In papers filed with the U.S. Bankruptcy Court in Wilmington, Del., the Melville, N.Y., company said it empathized with "the plight of these employees and former employees." It lamented the "hardships" suffered by current and former workers who put a portion of their regular paychecks into a retirement plan operated by the company. But it contradicted the employees' assertion that they had put money into an American Home deferred-compensation trust without realizing that their savings would be at risk. It said that "the plan participants were fully informed that, in the event of the company's insolvency, they would not have...any beneficial ownership in any plan assets." American Home, once the 10th-largest mortgage lender in the U.S., filed for bankruptcy Aug. 6. It has laid off more than 6,500 of its employees, halted its loan-origination business and is attempting to sell its loan-servicing unit. The company services about $50 billion in mortgages. The company has since said it intends to use funds in the deferred-compensation trust to repay its creditors. American Home hasn't said what it now owes creditors. As of March 31, it had $19.33 billion in total liabilities, and of $20.55 billion in assets. At least 43 participants in the deferred-compensation trust have said the company shouldn't be allowed to do that. They said their lawyers are investigating the possibility American Home "acted inappropriately" in encouraging its employees to put part of their paychecks into the trust. The participants said in court papers they were "induced to enter into compensation-deferral agreements and participate with promises of the value of tax-deferred investment growth and little, if any, discussion of the risks associated with insolvency." "It is hard to imagine the employees would have chosen to make compensation deferrals if they knew that their claims would fall behind the rights of lenders with claims in the hundreds of millions," the participants said. The participants, represented by the McDonald Hopkins law firm in Cleveland, said they have just begun to organize to fight American Home's attempt to seize the deferred-compensation funds. Several former employees have also filed individual objections to the seizure attempt. One of them, Patricia Shepherd of Phoenix, wrote to U.S. Bankruptcy Judge Christopher Sontchi last month saying she had been "swindled" by the company. Shepherd said she had $125,000 of her retirement money in the trust -- money that had been deducted from her regular paychecks. She said she was "invited to join" American Home's deferred-compensation program four years ago, and put part of her salary into the trust on the understanding she could draw it out upon retirement. "At no time did (American Home) explain that it was a company asset that could be lost if the company went under," Shepherd wrote. Sontchi is scheduled to consider the quarrel at a court hearing Monday