Colonial BancGroup granted ownership of compensation plan assets

By Caroline Salls

Pittsburgh, June 28 - The Colonial BancGroup, Inc. can exercise ownership over roughly $1.9 million in deferred compensation plan assets, according to a Friday filing with the U.S. Bankruptcy Court for the Middle District of Alabama.

The company's request to assert ownership over the plan assets was opposed by 21 employees who contributed to the plan.

In Friday's ruling, judge Dwight H. Williams Jr. said the deferred compensation plan qualified as a "top hat" plan, and, as a result, the assets are property of Colonial BancGroup's estate.

According to the filing, a top hat plan is an unfunded plan that is maintained by an employer to provide preferred compensation "for a select group of management or highly compensated employees."

These plans are often excluded from individual Employee Retirement Income Security Act of 1974 provisions, because the covered employees are "in a strong bargaining position" and therefore do not need the same protections given to other employees.

The plan assets totaled $1.9 million when the company filed for bankruptcy in August 2009.

Colonial BancGroup is the Montgomery, Ala.-based holding company for Colonial Bank. The company filed for bankruptcy on Aug. 25, 2009. Its Chapter 11 case number is 09-32303.

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