Allstate, AIG And Others Named To ResCap Creditors Committee
May 17 2012 - 9:47AM
Dow Jones News
Allstate Corp. (ALL), Deutsche Bank AG (DB), American
International Group Inc. (AIG) and six other firms will represent
unsecured creditors in the bankruptcy of mortgage lender
Residential Capital LLC.
U.S. trustee Tracy Hope Davis named the companies to the
committee, which is intended to ensure the interests of creditors
and other stakeholders are given adequate consideration in
bankruptcy proceedings, according to a court filing Wednesday
night.
ResCap, the money-losing subsidiary of government-owned auto
lender Ally Financial Inc. (GMA.XX), filed for Chapter 11
bankruptcy Monday as it faced upcoming loan maturities and millions
of dollars of bond-related payments. It listed assets of $15.7
billion and liabilities of $15.3 billion in its petition.
Ally, the former in-house financing arm for General Motors Co.
(GM), still owes $12 billion of a $17.2 billion bailout it received
during the financial crisis as part of the government's broader
rescue of the auto industry. It hopes to sever itself from costly
litigation over soured mortgage investments that have been a drag
on the rest of its business and prevented it from paying back the
government.
Other members of ResCap's unsecured creditors' committee include
Wilmington Trust, Bank of New York Mellon Corp. (BK), MBIA Inc.
(MBI) and Financial Guaranty Insurance Co., or FGIC.
Several of the creditors, including MBIA, FGIC and Allstate,
have filed lawsuits against ResCap, Ally and other affiliates
claiming they lied about the quality of mortgages packaged into
securities, resulting in billions of dollars of losses. MBIA and
FGIC sold insurance on several of ResCap's MBS deals, which they
claim included loans that didn't adhere to required underwriting
standards.
Ally has struck agreements with ResCap and some ResCap creditors
that would eliminate its liability in such claims, though the
agreements are subject to court approval.
-By Andrew R. Johnson, Dow Jones Newswires; 212-416-3214;
andrew.r.johnson@dowjones.com
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