ResCap Files Motion Seeking Order Confirming Plan Support Agreement

NEW YORK, May 23, 2013 /PRNewswire/ -- Residential Capital, LLC (ResCap) announced that today it filed a motion with the U.S. Bankruptcy Court seeking an order approving the entry into the previously announced comprehensive plan support agreement with Ally Financial Inc. (Ally) and ResCap's major creditors to support a Chapter 11 bankruptcy plan.

ResCap announced on May 14, 2013 that, as the successful culmination of mediation, it had entered into a plan support agreement with Ally and its principal creditors. Under the terms of this plan support agreement, Ally will contribute $2.1 billion to the ResCap Estate. This represents an increase of $1.35 billion over the amount to which it had agreed in the pre-petition plan support agreement.  The agreement settles existing and potential claims between ResCap and Ally and potential claims held by third parties in relation to ResCap, except for certain securities claims by the Federal Housing Finance Agency (FHFA) and the Federal Deposit Insurance Corporation (FDIC), as receiver for certain failed banks. The detailed terms of the plan support agreement have been filed with today's motion.

This settlement was reached as part of a mediation process among ResCap, its creditors and Ally, and through the invaluable efforts of the Honorable James Peck. Parties to the settlement include: ResCap and its affiliated debtor entities, Ally and its consolidated subsidiaries, the Official Committee of Unsecured Creditors, AIG Asset Management (U.S.), LLC, Allstate Insurance Company, Financial Guaranty Insurance Company, counsel to the putative class of persons represented in the consolidated class action entitled In re: Community Bank of Northern Virginia Second Mortgage Lending Practice Litigation, filed in the United States District Court for the Western District of Pennsylvania, MDL No. 1674, Case Nos. 03-0425, 02-01201, 05-0688, 05-1386, Massachusetts Mutual Life Insurance Company, MBIA Insurance Corporation, Paulson & Co. Inc., Prudential Insurance Company of America, certain investors in RMBS backed by mortgage loans held by securitization trusts associated with securitizations sponsored by the Debtors between 2004 and 2007 and represented by Kathy Patrick of Gibbs & Bruns LLP and Keith H. Wofford of Ropes & Gray LLP, Talcott Franklin of Talcott Franklin, P.C., as counsel, certain holders of senior unsecured notes (Senior Unsecured Notes) issued by ResCap under the Indenture dated as of June 24, 2005, and certain supplements thereto, Wilmington Trust, National Association in its capacity as Indenture Trustee for the Senior Unsecured Notes, and certain trustees or indenture trustee for certain mortgage backed securities trusts. 

The court's entry of the order would represent another milestone in the ResCap proceedings. In the year since ResCap's bankruptcy filing, as a result of management's careful planning and skilled execution, various arrangements and financings have been entered into that preserved value for creditors, including the successful bankruptcy asset sales to Ocwen Loan Servicing, LLC, Walter Management Investment Corp. and Berkshire Hathaway Inc., which generated proceeds of approximately $4.5 billion. During the bankruptcy, ResCap and its affiliates were responsible for the origination of more than $30 billion in new mortgage loans and ResCap was among the market leaders in mortgage modifications designed to assist consumers. ResCap was also successful in preserving over 3,500 jobs – most of which would have been lost in communities in which good jobs are not easy to replace. 

Assuming confirmation of the plan, ResCap will have achieved the extraordinary, and perhaps unprecedented, result of continuing in bankruptcy, without interruption, the operation of a financial services/mortgage origination and servicing business. For this, the Board of Directors would like to acknowledge the unwavering commitment and highly effective work of its management team formerly led by Tom Marano, its legal advisers, Morrison & Foerster, and its financial advisers, Centerview Partners and FTI Consulting. It would also like to acknowledge the important contributions of its CRO, Lewis Kruger, whose leadership, professionalism and stature are contributing greatly to enhancing the value of the ResCap Estate. 

SOURCE Residential Capital, LLC