ResCap: Berkshire chose not to be part of pre-bankruptcy sale process
June 15 |
June 15 (Reuters) - Warren Buffett's Berkshire Hathaway Inc , which has offered to buy key assets from Residential Capital LLC, chose not to take part in the process to sell the mortgage loan and servicing company when it was preparing to file for bankruptcy earlier this year, court documents show.
It later proposed buying the company for $1.00, among other options, ResCap said.
Berkshire, a major ResCap creditor, offered on Monday to buy ResCap's mortgage servicing unit and serve as a "stalking-horse" - or initial - bidder for loans ResCap plans to sell to parent Ally Financial for about $1.4 billion.
Berkshire earlier asked the court to appoint an independent examiner in the case to investigate some transactions between the company and Ally.
ResCap filed for bankruptcy last month with a plan in place for Nationstar Mortgage Holdings, owned by Fortress Investment Group, to make a $2.4 billion minimum offer for its mortgage servicing assets.
Ally, the former financing arm of General Motors Corp , is not in bankruptcy.
In a separate filing, Ally said that as a "reluctant" bidder it had offered to buy ResCap's legacy loan portfolio for $200 million more than if the sale occurred under a Chapter 11 plan.
Ally said it would be "comfortable" withdrawing its higher purchase price if requested by ResCap or the court but that the removal of the offer may deprive ResCap of the opportunity to realize an additional $200 million of value for its estate.
ResCap has hired Centerview Partners to determine the highest and best stalking-horse bidder for its assets.
ResCap and Nationstar have already met with government agencies Fannie Mae, Freddie Mac and Ginnie Mae to explain the sale process and get support for Nationstar's potential purchase of ResCap's assets.
Samuel Greene, co-head of Centerview's restructuring group, contacted Berkshire in January to be a part of the sale process, but Berkshire chose not to participate, ResCap said in court documents filed on Thursday.
Berkshire also met with Ally Chief Executive Michael Carpenter in mid-April, the documents showed.
Following that meeting, Ted Weschler of Berkshire said in a May 3 letter to ResCap that "neither ResCap entering into bankruptcy nor a sale of ResCap's mortgage production platform is in the best interests of Ally, the U.S. Treasury, Berkshire and other significant stakeholders in both Ally and ResCap."
Instead, Berkshire submitted an alternative transaction proposing among other things that it buy ResCap for $1.00, ResCap said.
ResCap said that at no time during discussions about the bankruptcy planning did Berkshire show any interest in being a part of the stalking horse process and that its actions were "atypical" of parties interested in becoming a stalking horse.
The case is In re: Residential Capital LLC, U.S. Bankruptcy Court, Southern District of New York, No: 12-12020.
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