Ally Financial Inc. has entered into agreements with the Residential Capital LLC (ResCap) estate and its major creditors to support a Chapter 11 plan in ResCap's bankruptcy cases.
The plan will settle all existing and potential claims between Ally and ResCap and all potential claims held by third parties related to ResCap that could be brought against Ally and subsidiaries that are not Chapter 11 debtors, except for securities claims by the Federal Housing Finance Agency and the Federal Deposit Insurance Corp., as receiver for certain failed banks.
‘This agreement is a seminal moment for Ally,’ says CEO Michael A. Carpenter. ‘We are pleased to have reached a consensual and comprehensive agreement that enables the company to put the issues related to the mortgage industry behind us.’
Going forward, Ally intends to focus on providing financial services and supporting its direct banking franchises as a bank holding company.
For its part, ResCap stayed alive long enough – and successfully enough – to continue originating loans during bankruptcy (some $30 billion worth) and servicing a sizable portfolio of distressed mortgages.
ResCap's origination and servicing platforms were eventually sold to Ocwen Loan Servicing LLC, Walter Management Investment Corp. and Berkshire Hathaway Inc., generating proceeds of approximately $4.5 billion.
