Ally Financial reached a deal with Residential Capital’s major creditors which would allow the company to complete its bankruptcy restructuring.
This move is expected to allow the US Treasury, which still owns 74% of Ally, to begin the exit. Ally said that the plan reached with ResCap’s major creditors will settle the claims between the two companies and add other potential claims held by third parties. Ally will defend its position as it believes it has strong defended against the claims.
“We are pleased to have reached a consensual and comprehensive agreement that enables the company to put the issues related to the mortgage industry behind us, ” said Ally CEO Michael A. Carpenter. “We remain confident in our strategic direction going forward and in the market position we hold with our leading dealer financial services and direct banking franchises.”
ResCa, which is the fifth largest mortgage company in the US, filed for bankruptcy in May last year, at the time holding 2.4 million residential loans in the US and an outstanding principal of $374 billion. This month Carpenter rejected claims according to which Ally should be held responsible for the mortgage servicer creditor claims. The problems with ResCap forced the US Treasury to delay in 2011 a planned IPO for Ally.
Source: The Detroit News