On Wednesday, December 11th, a United States Bankruptcy Court approved Residential Capital's plan to end its bankruptcy, which has been ongoing for 19 months now. Exiting the Chapter 11 bankruptcy plan will effectively put the mortgage lender on track to officially end its bankruptcy before the end of 2013. The plan was given the thumbs up at a hearing in Manhattan only 8 days after Residential Capital's former subsidiary, Ally Financial Inc., made a deal which effectively resolved the objections being made by a group of bondholders.
The bankruptcy plan, which could go into effect any time between next week and December 24th, is based on a $2.1 billion contribution from Ally to Residential Capital. With Ally's financial contribution and Residential Capital's subsequent exit from bankruptcy, it is expected that thousands of creditors who suffered from the 2008 mortgage crises will experience a bit of relief. The same is believed to be true of the residential mortgage-backed securities that collapsed more than 4 years ago. The bankruptcy exit plan will also allow for Ally to dedicate its attention to the repayment of the U.S. government, to which it owes $17 billion.
On December 3rd, Residential Capital agreed to pay a group of bondholders $125 million, a total which includes hundreds of millions of dollars in post-bankruptcy interest fees.
If you're facing debt or bankruptcy issues of any nature, don't hesitate to contact the San Diego Legal Pros for legal assistance. Our law office represents individuals and businesses in bankruptcy cases. You can call us at (619) 881-0020 to schedule a free consultation with a San Diego bankruptcy attorney at our firm. We are available 24/7 to take your call.