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
Eviction Is Not Always the End: Understanding Post-Possession Rent Claims in New Jersey and New York
No. An eviction does not automatically end a tenant’s obligation to pay rent. Post-eviction rent claims are common because recovering possession resolves who has the right to occupy the premises, but it does not extinguish the tenant’s contractual obligations under the lease. Whether unpaid or future rent remains owed depends on three factors: the lease’s […]
Author: Donald M. Pepe
Company Dissolved? Legal and Financial Consequences to Expect
A company is dissolved; legally, it ceases to exist. Accordingly, dissolution results in significant legal and financial consequences. It is a process that must be properly managed to avoid continuing liability. The Corporate Dissolution Process Corporate dissolution is the legal process of formally closing a corporation, paying its debts and distributing the remaining assets. Most […]
Author: Jay McDaniel
The Legal Implications of Signing a Triple Net Lease
A triple net lease is a commercial lease in which the tenant pays the property’s real estate taxes, insurance, and maintenance costs, known as the three nets, in addition to base rent. They are most often used in freestanding retail and office buildings and in large single-tenant industrial properties, with terms that typically run 10 […]
Author: Donald M. Pepe
When to Settle and When to Fight: A Litigator's Framework
Every lawsuit comes with a cost, and knowing when to settle a lawsuit is one of the most consequential decisions a business owner will face. Experienced litigators understand how to minimize cost and obtain certainty for their clients. For many business owners, the decision is viewed almost entirely through a financial lens: What will it cost […]
Author: Sean M. Pena
A Whistleblower Just Filed a Complaint Against Your Company: Here's What to Do Now
Few situations create more uncertainty than learning that an employee has filed a whistleblower complaint. Questions arise immediately: Is the allegation legitimate? Should the employee be placed on leave? Do we need to notify our insurance carrier? Are we now prevented from disciplining the employee if there are unrelated ongoing work related issues? There is […]
Author: Sean M. Pena
Assignment for the Benefit of Creditors: An Alternative to Bankruptcy for Distressed Businesses
When a business reaches the point where it can no longer service its debts or otherwise resolve its liabilities, management is often faced with a difficult question: is a bankruptcy filing necessary or is there another way to perform an orderly liquidation or sale of the business assets? While Chapters 7 and 11 of the […]
Author: John D. Giampolo
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.