Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comFirm Insights
Court Grants ResCap Extension to File Reorganization Plan
Author: Joel R. Glucksman
Date: May 23, 2013
Key Contacts
Back
A U.S. Bankruptcy Court has granted Residential Capital’s request for a 30-day extension in filing its reorganization plan. During this period, the company will be unencumbered by the risk of rival proposals.
In a U.S. Bankruptcy Court in Manhattan, Judge Martin Glenn addressed the progress that’s already been made in the contentious and ongoing bankruptcy dispute, and agreed with ResCap’s representatives that an extension may give the firm more time to settle disputes with creditors and its parent company, Ally Financial.
“The ongoing mediation is the single most important factor in supporting the extension of exclusivity,” said Glenn. “All of the effort needs to be concentrated on negotiations between the parties, with or without the mediator.”
In addition to granting the company more time to develop a plan, Judge Glenn also overruled objections from junior bondholders seeking $2 million in claims and more control over ResCap’s bankruptcy proceedings, according to Dow Jones Newswires. ResCap, Ally and creditors are expected to either agree to a global settlement or walk away with a deal in place by the end of the week. If Ally and a committee of creditors fail to reach an accord with ResCap and drop lawsuits, the distressed mortgage firm will use the 30-day extension to develop a reorganization plan that attempts to resolve as many issues as possible.
The mediation among ResCap, Ally and the creditors also aims to determine Ally’s financial responsibilities toward ResCap for actions it took prior to the latter filing for bankruptcy. Creditors claim that Ally and ResCap acted as a “single economic entity” prior to bankruptcy law proceedings, and therefore Ally should be required to pay a portion of ResCap’s debt. Originally, Ally proposed a $750 million payment to avoid potential lawsuits, but creditors dismissed the figure as too low.
If the negotiations fail, the three parties must find another path to determine how to manage $40 billion in claims relating to sour mortgage-backed securities, according to American Banker.
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
Does Your Homeowners Insurance Provide Adequate Coverage?
Your home is likely your greatest asset, which is why it is so important to adequately protect it. Homeowners insurance protects you from the financial costs of unforeseen losses, such as theft, fire, and natural disasters, by helping you rebuild and replace possessions that were lost While the definition of “adequate” coverage depends upon a […]
Author: Jesse M. Dimitro
Understanding the Importance of a Non-Contingent Offer
Making a non-contingent offer can dramatically increase your chances of securing a real estate transaction, particularly in competitive markets like New York City. However, buyers should understand that waiving contingencies, including those related to financing, or appraisals, also comes with significant risks. Determining your best strategy requires careful analysis of the property, the market, and […]
Author: Jesse M. Dimitro
Fred D. Zemel Appointed Chair of Strategic Planning at Scarinci & Hollenbeck, LLC
Business Transactional Attorney Zemel to Spearhead Strategic Initiatives for Continued Growth and Innovation Little Falls, NJ – February 21, 2025 – Scarinci & Hollenbeck, LLC is pleased to announce that Partner Fred D. Zemel has been named Chair of the firm’s Strategic Planning Committee. In this role, Mr. Zemel will lead the committee in identifying, […]
Author: Scarinci Hollenbeck, LLC
Novation Agreement Process: Step-by-Step Guide for Businesses
Big changes sometimes occur during the life cycle of a contract. Cancelling a contract outright can be bad for your reputation and your bottom line. Businesses need to know how to best address a change in circumstances, while also protecting their legal rights. One option is to transfer the “benefits and the burdens” of a […]
Author: Dan Brecher
What Is a Trade Secret? Key Elements and Legal Protections Explained
What is a trade secret and why you you protect them? Technology has made trade secret theft even easier and more prevalent. In fact, businesses lose billions of dollars every year due to trade secret theft committed by employees, competitors, and even foreign governments. But what is a trade secret? And how do you protect […]
Author: Ronald S. Bienstock
What Is Title Insurance? Safeguarding Against Title Defects
If you are considering the purchase of a property, you may wonder — what is title insurance, do I need it, and why do I need it? Even seasoned property owners may question if the added expense and extra paperwork is really necessary, especially considering that people and entities insured by title insurance make fewer […]
Author: Patrick T. Conlon
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Court Grants ResCap Extension to File Reorganization Plan
Author: Joel R. Glucksman
A U.S. Bankruptcy Court has granted Residential Capital’s request for a 30-day extension in filing its reorganization plan. During this period, the company will be unencumbered by the risk of rival proposals.
In a U.S. Bankruptcy Court in Manhattan, Judge Martin Glenn addressed the progress that’s already been made in the contentious and ongoing bankruptcy dispute, and agreed with ResCap’s representatives that an extension may give the firm more time to settle disputes with creditors and its parent company, Ally Financial.
“The ongoing mediation is the single most important factor in supporting the extension of exclusivity,” said Glenn. “All of the effort needs to be concentrated on negotiations between the parties, with or without the mediator.”
In addition to granting the company more time to develop a plan, Judge Glenn also overruled objections from junior bondholders seeking $2 million in claims and more control over ResCap’s bankruptcy proceedings, according to Dow Jones Newswires. ResCap, Ally and creditors are expected to either agree to a global settlement or walk away with a deal in place by the end of the week. If Ally and a committee of creditors fail to reach an accord with ResCap and drop lawsuits, the distressed mortgage firm will use the 30-day extension to develop a reorganization plan that attempts to resolve as many issues as possible.
The mediation among ResCap, Ally and the creditors also aims to determine Ally’s financial responsibilities toward ResCap for actions it took prior to the latter filing for bankruptcy. Creditors claim that Ally and ResCap acted as a “single economic entity” prior to bankruptcy law proceedings, and therefore Ally should be required to pay a portion of ResCap’s debt. Originally, Ally proposed a $750 million payment to avoid potential lawsuits, but creditors dismissed the figure as too low.
If the negotiations fail, the three parties must find another path to determine how to manage $40 billion in claims relating to sour mortgage-backed securities, according to American Banker.