Reuters: Bankruptcy News: ResCap bankruptcy examiner eyes subpoenas, 6-month probe

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ResCap bankruptcy examiner eyes subpoenas, 6-month probe Jul 27th 2012, 21:14 Fri Jul 27, 2012 5:14pm EDT * Examiner to review ResCap claims, pre-bankruptcy dealings * Judge approves scope of examiner Arthur Gonzalez's review July 27 (Reuters) - The court-appointed examiner reviewing the bankruptcy of mortgage lender Residential Capital LLC plans to seek authority to issue subpoenas and expects his review to take six months, according to a court filing. Arthur Gonzalez, the examiner, wants authority to issue subpoenas on anyone possessing "information relevant to the investigation," and will need "a substantial amount of time" to prepare his report, his lawyers said in a filing with the U.S. bankruptcy court in Manhattan. "A realistic time frame for the preparation of such a report is six months." U.S. Bankruptcy Judge Martin Glenn on Friday issued an order approving the scope of Gonzalez's probe. The approval does not cover the request for subpoenas. The examiner plans to review all material agreements between ResCap and its parent Ally Financial Inc, and with former majority owner Cerberus Capital Management LP. He also plans to review business decisions by top ResCap officers and its board, as well as the validity of claims by and against ResCap. Gonzalez was retained this month after Warren Buffett's Berkshire Hathaway Inc , a ResCap creditor, sought an examiner to review what it called "potentially improper" pre-bankruptcy transactions between ResCap and Ally. Examiners may investigate allegations such as dishonesty, fraud, incompetence and mismanagement. Legal experts have said a debtor can be expected to remain in bankruptcy while an examiner works on a report. Gonzalez retired in March as chief judge of the Manhattan bankruptcy court, where he oversaw such bankruptcies as Chrysler LLC, Enron Corp and WorldCom Inc. He is also a professor at New York University School of Law. Once part of General Motors Corp, Ally put ResCap into Chapter 11 on May 14 as a means of addressing the unit's mortgage-related liabilities. ResCap is selling assets to help repay creditors. Ally is roughly 74 percent-owned by taxpayers, and did not file for court protection. The case is In re Residential Capital LLC, U.S. Bankruptcy Court, Southern District of New York, No. 12-12020. Link this Share this Digg this Email Reprints

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