Ally to contribute $2.1 bln to settle ResCap litigation

Thu May 23, 2013 9:22am EDT

May 23 (Reuters) - Ally Financial Inc agreed to contribute $2.1 billion to Residential Capital LLC to settle claims that it stripped the bankrupt mortgage subsidiary of choice assets, paving the way for ResCap to pay back its creditors.

Under the deal, which was detailed in a court filing on Thursday, Ally will contribute $1.95 billion in cash and Ally anticipates $150 million will come from its insurers.

Ally said in a statement it expects to record a charge of $1.55 billion in the second quarter of 2013 related to the deal.

As part of the agreement, bond insurer MBIA Corp will receive a non-subordinated claim of $719 million against ResCap, and two claims each for $1.45 billion against two other bankrupt ResCap entities, GMACM and RFC.

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