Ally Financial’s ResCap files for bankruptcy with at least $1 billion in both assets, debts

Article by Christian A., on May 15, 2012

Mortgage company Residential Capital LLC has filed a Chapter 11 petition today in U.S. Bankruptcy Court in Manhattan, listing at least $1 billion each in liabilities and assets. The company originates and services residential mortgages. Its parent Ally Financial Inc. is attempting to repay a U.S. government bailout.

Companies generally file for bankruptcy under the Chapter 11 of the U.S. Bankruptcy Code in order to maintain operations, reduce debt and exit court protection. Ally Chief Executive Officer Michael A. Carpenter stated that ResCap's action will allow the parent company to have a permanent solution to its "legacy mortgage risks" and to bring these matters behind.

Ally is the former GMAC subsidiary of General Motors that focuses in automobile loans and dealer floorplan financing. The U.S. Treasury owned 74% of Ally after receiving $17.2 billion in government bailout.

In 2010, the Treasury was not able to find a purchaser for ResCap. Carpenter had stated that an initial public offering for Ally would not commence without progress on a resolution for ResCap. The mortgage company's board voted to declare bankruptcy and organize a sale to Nationstar Mortgage Holdings Inc. and Fortress Investment Group LLC for around $2.3 billion, ResCap CEO and Chairman Thomas Marano revealed in an interview.

Fortress owns a majority of Nationstar, which will purchase a portfolio of servicing assets and a mortgage-origination unit. The business operations will proceed without interruption, Marano assured. Mortgage servicers will be responsible for billing, foreclosures and collection. Ally will offer $150 million to aid in the financing of ResCap's operations during bankruptcy, according to a statement. The vehicle lender also consented to buy $1.6 billion of securities if others will not.

Topics: ally financial

If you liked the article, share on:

Comments

Recommended

Ever since the Regera premiered in 2016, Koenigsegg has been firm about increasing its coverage around the globe. Part of the idea was to ask its employees in Angelholm to...
by - February 21, 2017
There is no harm in admitting that both the conventional and the hybrid versions of the Lexus LC 500 are real stunners when it comes to its exterior styling. Even...
by - February 21, 2017
Jaguar is placing three new Ingenium engines on the F-Pace crossover, XF saloon and XE sedan for the 2018 model year. According to Jaguar’s recent announcement, the updates will also...
by - February 21, 2017
After Volkswagen snagged Toyota’s crown as the world’s best-selling automaker, there’s no stopping the Japanese manufacturer from dominating the hybrid arena. As of January 31st , Toyota’s increasing global unit...
by - February 21, 2017
There is no denying that the performance versions of the Jaguar F-Type and the Land Rover Range Rover are definitely hot – both in terms of looks and road dynamics....
by - February 21, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries