Reuters: Bankruptcy News: Section of ResCap bondholders end support for reorganization

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Section of ResCap bondholders end support for reorganization Sep 27th 2012, 03:52 Sept 27 | Wed Sep 26, 2012 11:52pm EDT Sept 27 (Reuters) - A section of secured bondholders of Residential Capital LLC, the bankrupt mortgage unit of Ally Financial, is pulling out of an agreement to support the company's reorganization plan, according to an Ally spokeswoman. "The agreement between Ally and ResCap's third lien bondholders has been terminated by the bondholders," Ally's Gina Proia told Reuters late on Wednesday. Proia said the move by the bondholders does not change Ally's view of the ResCap bankruptcy process and that the reorganization plan will continue to move forward. She said the company will now continue to work with junior secured bondholders toward a broader reorganization plan. "The action enables the bondholders to trade their bonds without waiving the right to accrued and unpaid interest" during the bankruptcy process, Proia said. ResCap filed for bankruptcy in May with a plan in place for Nationstar Mortgage Holdings, owned by Fortress Investment Group, to make a $2.4 billion minimum offer for the mortgage servicing assets. Ally Financial also agreed to buy a group of ResCap mortgage loans for $1.4 billion. Ally is not in bankruptcy. Proia said Ally's agreement with ResCap is unaffected by the bondholders' action, as is ResCap's agreement with the residential mortgage-backed securities (RMBS) investors. Some RMBS investors have said they will support the reorganization plan. ResCap's bankruptcy came as pressure increased on Ally, the former financing unit of General Motors, to repay Treasury Department's bailout money. Link this Share this Digg this Email Reprints

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