Warren Buffett sought to buy Residential Capital from Ally Financial before bankruptcy

Article by Christian A., on May 21, 2012

Before Residential Capital entered bankruptcy, billionaire Warren Buffett had wanted to buy it from Ally Financial Inc., according to three sources. They said that Buffett had assigned former hedge-fund manager Ted Weschler to approach Ally to discuss their offer. The sources also said that Berkshire Hathaway, which is owned by Buffett, would have acquired the assets for almost nothing paid upfront.

However, he will get the possible liabilities like the increasing litigation costs as well as other claims. The people said that Buffett had hoped that ResCap would be able to avoid filing for bankruptcy since Berkshire had unsecured debt in the mortgage unit.

The sources said that the Weschler proposal was rejected by Ally, the former GMAC finance unit of General Motors, because it concluded that the company would be better protected from potential liabilities by filing for bankruptcy filing and a sale. In an interview, ResCap CEO Thomas Marano said that ResCap's board voted to declare bankruptcy.

In addition, they prepared to sell to Fortress Investment Group LLC and Nationstar Mortgage Holdings Inc. for about $2.3 billion. The people said that Fortress and Nationstar won't assume the liabilities that Berkshire had intended to get.

ResCap spokeswoman Susan Fitzpatrick said that the company is “confident” that the bankruptcy court-supervised bidding process would guarantee that the ResCap estate would get the best mix of price and terms for its assets in a deal that the court would approve of.

If you liked the article, share on:

Topics: ally financial

Comments

Recommended

It has been nearly eight years since Toyota entered a new era of sports cars when it officially unveiled the production version of the Toyota 86 – also known as...
by - February 27, 2019
The new Audi TT RS – yes, the top version of the German carmaker’s facelifted TT model series – is now officially here. If you could remember, the range-topping TT...
by - February 18, 2019
Nearly half a year ago when McLaren Automotive unveiled the McLaren 600LT Coupe, the British carmaker is now introducing a version that lets its passengers enjoy the thrill of an...
by - January 25, 2019
German carmaker Volkswagen is now making the latest evolution of the new Volkswagen Golf GTI -- the new Golf GTI TCR. First unveiled as a concept at the annual GTI...
by - January 24, 2019
It has been three and a half years since BMW unveiled the sixth generation of the BMW 7 Series. Thus, it is really about to give the 7 Series a...
by - January 17, 2019