A report on Residential Capital LLC’s pre-bankruptcy deals with parent Ally Financial Inc. (ALLY) will be filed with the court on May 10, lawyers for the retired judge leading the probe said in a filing.
The report will focus on Ally’s proposal to pay $750 million in exchange for avoiding lawsuits related to its actions before ResCap filed bankruptcy, a settlement opposed by creditors as too small.
Former U.S. Bankruptcy Judge Arthur J. Gonzalez will file his report on the day that ResCap’s official creditor committee says is the last chance that a “global settlement” could be reached to avoid court fights over the company’s reorganization.
The committee, with ResCap and Ally, is in mediation overseen by a judge who’s a former colleague of Gonzalez on the U.S. Bankruptcy Court in Manhattan. Those talks may lead to a deal by May 10, Kenneth H. Eckstein, an attorney for the committee said in court yesterday.
New York-based ResCap filed for bankruptcy last year, partly to help it resolve lawsuits brought by investors that purchased mortgage bonds backed by $226 billion worth of home loans. The lawsuits claimed the bonds lost value because many of the loans were bad.
The case is In re Residential Capital LLC, 12-bk-12020, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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