Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comFirm Insights
Bankruptcy Judge Approves ResCap Deal With FGIC
Author: Joel R. Glucksman
Date: September 27, 2013
Key Contacts
Back
A bankruptcy judge has approved a $596.5 million deal between Financial Guaranty Insurance Co and bankrupt Residential Capital LLC, putting an end to billions of dollars of claims associated with mortgage-backed securities. The settlement also resolved another $1.3 billion in claims related to trusts insured by FGIC, the former bond insurance unit of FGIC Corp.
The settlement faced significant opposition from holders of junior secured notes that were issued by ResCap, Reuters reports. The opponents argued that Judge Martin Glenn should have rejected the multimillion-dollar settlement because ResCap allegedly overestimated the amount it owed to bond insurer FGIC. The noteholders also asserted that the deal was not properly negotiated, Reuters added.
Despite the opposition, the settlement is a step forward in the company’s bid to exit its complicated bankruptcy, and it will enable ResCap to escape FGIC’s attempt to collect a projected $5.55 billion in claims. When the housing market was vibrant, FGIC insured a sizable amount of mortgage bonds for ResCap. Following the housing market collapse, FGIC claimed that ResCap misrepresented the home loans, which led millions of Americans to default on their loans and hold FGIC accountable for insurance payments.
In his 53-page opinion, Judge Glenn called the settlement “fair and equitable,” and said the deal is in the best interest of investors who purchased mortgage bonds insured by FGIC.
“It will resolve significant claims against the estates for far less than the amounts asserted and it imposes a cap on FGIC’s claims in case the contemplated plan is not confirmed,” Glenn wrote, according to Dow Jones Business News.
ResCap initially sought protection under Chapter 11 of the bankruptcy law in May 2012, and it has since faced a number of obstacles and challenges in its multibillion-dollar bankruptcy proceedings. A hearing on confirmation of the company’s proposed bankruptcy plan is scheduled for November 19, but Judge Glenn said the date may get pushed back.
- Practices: Corporate Transactions & Business, Bankruptcy & Creditors' Rights, Bankruptcy Litigation
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
How to Effectively Use Contracts to Manage Risk
Key provisions in your contracts, including those relating to indemnification, insurance, and defense, are essential to contract risk management. While sometimes considered “boilerplate,” these provisions play a pivotal role when determining which party is responsible for certain costs and liabilities. They must always be negotiated and drafted carefully. Indemnification Clauses Businesses should never overlook the […]
Author: George McGowan
Understanding Portability for Estate and Gift Tax
Portability of estate and gift tax enables a surviving spouse to inherit any unused portion of their deceased spouse’s federal estate and gift tax exemption. So, if one spouse doesn’t utilize their full exemption, the surviving spouse can effectively double their exemption amount with regard to estate tax liability. For married couples, portability offers a […]
Author: Marc J. Comer
Pet Trusts in New Jersey and New York: A Practical Estate Planning Tool
For many of us, pets are more than companions—they are members of the family. Yet they are often overlooked or inadequately provided for when it comes to estate planning. A pet trust offers a legally enforceable way to ensure that your animal continues to receive proper care if you become incapacitated or pass away. As […]
Author: Marc J. Comer
How Can Trusts Be Used in Business Succession?
For many New Jersey business owners, a closely held company represents decades of work, financial investment, and personal sacrifice. Trusts in business succession planning are one of the most effective tools for protecting that value, allowing founders to control how and when the business passes to the next generation while reducing the risk of disputes, […]
Author: George McGowan
Read Before You Sign: IT Contract Pitfalls Every NJ Business Should Know
In today’s digital economy, New Jersey businesses of all sizes rely heavily on technology vendors, software providers, cloud platforms, and managed IT services. Whether your company is purchasing software, migrating data to the cloud, engaging a cybersecurity consultant, or entering into a long-term managed services agreement, a careful IT contract review can have significant operational, […]
Author: George McGowan
New York NDA Requirements for Businesses
Non-disclosure agreements (NDAs) remain a critical tool for protecting sensitive business information. However, New York NDA requirements have evolved, and businesses must ensure these agreements are carefully drafted to remain enforceable. In a competitive market like New York City, NDAs are commonly used to protect proprietary information, client relationships, and strategic plans. At the same […]
Author: Dan Brecher
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.