MORT. PAPER AND BANKRUPTCY......WILL AGNC BE NEXT.......374 BILLION IN RES. MORT. PAPER. GOES BK.
Residential Capital LLC, the mortgage lending unit of U.S. government-owned Ally Financial Inc (NYS:ALLY PR B), has filed a bankruptcy reorganization plan that calls for unsecured creditors to recover 36.3 cents on the dollar.
ResCap described the payout in a disclosure statement filed on Thursday with the U.S. Bankruptcy Court in Manhattan.
The 399-page filing is designed to help creditors vote on the plan. It said ResCap and its creditors' committee consider the plan "the best means to fairly and efficiently resolve" the Chapter 11 case.
Unsecured creditors would recover roughly $779 million of the $2.15 billion they are owed, and junior secured noteholders would recover the $2.22 billion they are owed, the filing said.
Paulson & Co, the hedge fund firm run by billionaire John Paulson, is among the larger unsecured creditors. It is unclear what the firm paid for its claims.
The proposed payouts are based on a May 13 global settlement among ResCap, Ally and various creditors, some of which blamed both entities for ResCap's bankruptcy.
That accord calls for ResCap to receive $2.1 billion from Ally, which in exchange will receive immunity from legal claims by ResCap and its creditors.
ResCap sought court protection on May 14, 2012 to address soaring mortgage liabilities. It had serviced about $374 billion of U.S. residential mortgage loans before the bankruptcy.