Lawyer Referral Service

LRS Blog

Posted by: Maricopa Lawyers on Jun 12, 2013

New York based Residential Capital LLC is working to recover from a declared bankruptcy in 2012. The company is following up on original plans to sell off mortgage businesses and settle lawsuits launched by mortgage bond owners.

Residential Capital LLC recently won a ruling that will permit the company to repay over $1.9 billion in accrued debt immediately following their declared bankruptcy. This figure includes $1.1 billion to parent company Ally Financial Inc. (ALLY) that the company had earlier been loaned prior to filing.

ResCap is currently in talks to negotiate the distribution of over $4 billion in cash to all respective creditors, the latter owed nearly $6.3 million. The bankrupt company will need to comply with the original repayment before this is a possibility, but they believe the recovery process in its current form will potentially save them $3 million per month in collected interest.

The ResCap payments are being supported by the official committee of unsecured creditors. ResCap has revealed through court papers the payments are stemming from a deal originally struck in May between Ally and other significant creditors.

The ruling has proved somewhat beneficial to parent company Ally. Immediately following official ruling, Ally’s 6% bonds set to mature in 2019 rose more than 1% to 99.93 cents per dollar. This news was reported by the Financial Industry Regulatory Authority.

Some close to the developing financial situation are arguing it could prove exceedingly difficult to receive cash from Ally, providing a court would later rule the auto lender did not possess the proper entitlement.

Residential Capital is set to start the repayment process immediately now that they have been granted approval in the bankruptcy approval court.