Residential Capital, the former lending arm of Ally Financial that went through a bankruptcy reorganization, received the approval of a U.S. Bankruptcy Court to finalize its reorganization plan, allowing the firm to full exit the bankruptcy process.
ResCap's lawyers at Morrison & Foerster announced that Judge Martin Glenn with the U.S. Bankruptcy Court for the Southern District of New York approved the plan this week.
The finalized plan includes a global settlement that resolves $100 billion in claims. It takes effect on Dec. 2013.
Morrison & Foerster said the reorganization included the previous procurement of a deal to sell ResCap’s loan servicng and originations platform to Ocwen Loan Servicing. It also guided the sale of the company’s legacy loan portfolio to Berkshire Hathaway Inc.
According to a statement from Morrison & Foerster, said sales closed in February 2013 and represent the first time a sustainable servicing and origination platform has been sold in chapter 11.
“The debtors’ estates obtained more than $4.5 billion for the auctioned assets, translating to approximately $1 billion of incremental value for the debtors’ estates over what the debtors would have received through the respective stalking horse transactions,” the statement reads. “Between the auction and the sale hearing, the firm was successful in resolving more than 50 filed sale objections, including those filed by a number of key governmental constituents, RMBS trustees and third-party vendors.”
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