| June 19
June 19 Ally Financial Inc's proposed $2.1
billion agreement reached last month with creditors of its
bankrupt Residential Capital LLC subsidiary cleared a key court
deadline with only one vigorous objection, though several
warning shots were fired.
Ally agreed to the settlement last month to end allegations
it stripped ResCap of choice assets including the online lender,
Ally Bank, before dumping the business into bankruptcy, which
left creditors empty-handed.
"The court respectfully should stop this runaway train in
its tracks and address fundamental defects in what mounts to a
pre-approved plan of reorganization that violates basic tenets
of law and is unconfirmable," said Syncora Guarantee Inc, in the
Syncora insured some of the mortgage-backed bonds issued by
units of ResCap, which have fallen sharply in value, and it
objected for a variety of reasons. Syncora alleged that ResCap
did not explain how it decided to split money from the Ally
settlement among different bond insurers.
The Department of Justice's bankruptcy watchdog, plaintiffs
in a class action and government's pension insurer also objected
as the deadline passed on Wednesday. Several parties also let
the court know that while they were not formally objecting, they
were taking up positions against the yet-to-be-filed
The deal announced May 23 was meant to extract Ally from its
disastrous foray into subprime home lending, allowing it to
focus on its auto lending business and repaying the remainder of
a $17 billion government bail-out.
The government owns about three-quarters of Ally, formerly
General Motors Acceptance Corp, and is still owed more than $10
The Ally settlement is meant to be a blueprint for resolving
ResCap's contentious Chapter 11 and the deal needs the approval
of the U.S. Bankruptcy Court in Manhattan.
ResCap plans to file a plan of reorganization by July 3 that
will explain in more detail how creditors will be paid.
A hearing has been scheduled for June 26 before Judge Martin
Glenn to approve the Ally settlement plan.