ResCap Investigation Cost Expected to Rise to $83 Million
A court-ordered investigation in Residential Capital LLC’s bankruptcy case is estimated to cost $82.75 million, more than double an earlier calculation by the former judge leading the probe.
Arthur Gonzalez, the former bankruptcy judge who was appointed as examiner last year to perform the investigation, estimated the fees for advisers in a filing today in U.S. Bankruptcy Court in Manhattan.
“The investigation has proven to be an enormous undertaking,” lawyers for Gonzalez said.
Gonzalez was appointed in July in the New York-based mortgage company’s bankruptcy case to investigate transactions between ResCap and parent Ally Financial Inc. (ALLY) as well as Cerberus Capital Management LP, claims ResCap proposes to release, and claims against officers and directors.
Cerberus led a group of investors that acquired a 51 percent stake in Ally, then known as GMAC, in 2006. The stake was diluted in bailouts that began in 2008 by the U.S. government, which is now majority owner.
Gonzalez estimated in August that the report would cost $29 million to $36 million.
In today’s filing, Gonzalez said his lawyers at Chadbourne & Parke LLP and Wolf Haldenstein Adler Freeman & Herz LLP will cost $44 million. Financial adviser Mesirow Financial Consulting is estimated to earn $38.2 million in fees, and Gonzalez’s own fee would be $550,000, according to the filing. He said the report should be completed in early May.
Norman Rosenbaum, an attorney for ResCap, didn’t respond to an e-mail seeking comment about the cost of the examiner’s investigation.
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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