A report on Residential Capital LLC’s pre-bankruptcy transactions with parent company Ally Financial Inc. (ALLY) and others will take about two months longer than planned, the retired judge conducting the probe said.
Former U.S. Bankruptcy Judge Arthur J. Gonzalez, ResCap’s bankruptcy examiner, said he needs until early April to get required documents and to finish interviewing key witnesses.
“The examiner is mindful of the importance of his report to the case and will continue to seek the discovery he needs to complete his report,” lawyers for Gonzalez said in papers filed today in U.S. Bankruptcy Court in Manhattan.
In July, the judge overseeing ResCap’s Chapter 11 bankruptcy, Martin Glenn, ordered a probe of the mortgage company’s proposal to settle legal claims against Detroit-based Ally that may be worth billions of dollars.
Berkshire Hathaway Inc. (BRK/A), the holding company run by billionaire Warren Buffett, requested the investigation into ResCap’s proposal to accept $750 million from Ally to settle potential legal liability tied to mortgage-related securities.
At the time, Berkshire owned about $900 million of ResCap’s junior secured bonds and was trying to buy some of the company’s assets. Berkshire, based in Omaha, Nebraska, later won an auction for a portfolio of ResCap loans with a bid of about $1.5 billion.
The case is In re Residential Capital LLC, 12-12020, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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