Brad Morrice, the co-founder of bankrupt subprime lender New Century Financial in Irvine, was “terminated without cause” from the chief executive officer’s job, the company said Tuesday.
Morrice, who co-founded New Century in 1995 and led it to become one of the nation’s largest lenders to people with spotty credit – originating $60 billion in loans in 2006 – also captained his company into bankruptcy.
New Century’s announcement said Morrice stands to be paid as much as $5 million under his severance agreement, although the Delaware bankruptcy court must approve all such settlements. Other ex-employees received two weeks’ pay and a maximum $10,950 for unused vacation.
The regulatory filing said Morrice’s contract entitles him to three years of salary plus his highest annual bonus during the past three years. In the company’s most recent proxy statement, Morrice’s salary was reported as $569,250. He received a bonus of $3.4 million in 2004.
Morrice, 50, who lives in Laguna Beach, did not issue a statement and could not be reached for comment. He founded New Century with Robert Cole and Edward Gotschall, who both retired in 2006.
Morrice still faces federal civil and criminal investigations of New Century’s finances and accounting practices and is a defendant in dozens of shareholder lawsuits.
The company’s statement also announced the departure of Anthony Meola, New Century’s executive vice president for loan production. Meola’s contract calls for him to receive up to two years’ salary and bonuses. His salary was not publicly available.
Management was turned over to Holly Etlin as chief executive officer and Michael Tinsley as chief financial officer. Both Etlin, 49, and Tinsley, 54, will remain directors of AlixPartners, a financial advisory firm specializing in corporate restructuring. Etlin will earn $695 per hour while Tinsley will be paid $525 an hour working for New Century while liquidation continues, New Century said.
New Century announced the sale of one of its last major assets, mortgage loans that were purchased by Ellington Capital Management Group for $57.9 million. The company is awaiting approval from the bankruptcy court to complete the $188 million sale of its loan servicing platform, which was auctioned to Carrington Capital Management in May. The company is still trying to sell its loan underwriting technology and other proprietary technology.
New Century collapsed this spring amid soaring loan defaults and an announcement of accounting errors for all of 2006. The news triggered Wall Street creditors to call for New Century to repurchase up to $8 billion in loans, which the company could not afford. After filing for bankruptcy protection on April 2, New Century disclosed errors in its 2005 financial statements.
Last week, the Department of Justice named Michael Missal, a Washington, D.C., attorney specializing in securities investigations, to serve as examiner in New Century’s bankruptcy. Missal was lead counsel in WorldCom Inc.’s bankruptcy proceedings and served as lead counsel to a panel that investigated CBS News’ report on President Bush’s service in the Texas Air National Guard that led to the ouster of anchorman Dan Rather.
Contact the writer: 714-796-7969 or jgittelsohn@ocregister.com
