Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comFirm Insights
Judge Rules Against ResCap Noteholders, Denounces Legal Tactics
Author: Joel R. Glucksman
Date: November 29, 2013
Key Contacts
Back
A U.S. bankruptcy judge ruled this week that a group of ResCap noteholders are not entitled to interest that has accrued on their claims since the mortgage servicer filed for bankruptcy protection last year.
U.S. Bankruptcy Judge Martin Glenn denied claims made by junior secured noteholders for at least $350 million in post-petition interest. Glenn ruled that the collateral backing $2.2 billion in debt held by the junior secured noteholders was only worth $1.9 billion. Therefore, since their claims are undersecured, the noteholders aren’t entitled to post-petition interest, Bloomberg reported.
The court’s ruling comes ahead of next week’s hearing on ResCap’s plan to exit bankruptcy. Under the company’s proposed plan, it would pay the noteholders all of their principal and normal interest that accrued before the case was filed last year. In his 119-page ruling, Judge Glenn denounced the noteholders’ legal tactics as “unfortunate,” as they were essentially the only creditors opposing ResCap’s plan to exit bankruptcy proceedings. He also added that during the entire course of bankruptcy proceedings, the noteholders have pursued a “strategy where they contest everything and concede nothing (even when the court has questioned whether they are acting in good faith).”
“It should not be lost on anyone that the [noteholders] stand virtually alone in this case in failing to reach a consensual agreement to resolve their issues,” Judge Glenn wrote, according to Dow Jones Business News. “The result has been protracted proceedings that have burdened the estate and reduced funds available to satisfy creditor claims. That is unfortunate.”
ResCap, a subsidiary of Ally Financial, filed for protection under Chapter 11 of the bankruptcy law in May 2012 as litigation over bad mortgage securities grew. Over the course of the proceedings, the company reached agreements to sell mortgage-servicing platforms and loan portfolios through a series of bankruptcy auctions that generated $4.5 billion in proceeds.
- Practices: Bankruptcy & Creditors' Rights, Corporate Transactions & Business, 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
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
Breaking Down New Jersey’s “Mansion” Tax: What Buyers and Sellers Need to Know
For many years, the New Jersey Mansion Tax has been a significant consideration in high-value real estate transactions. Recent legislative changes, however, have substantially altered how the tax operates, including who is responsible for paying it and the amount owed in certain transactions. Whether you are purchasing, selling, or investing in New Jersey real estate, […]
Author: George McGowan
Estate Planning for Digital Assets Under New Jersey Law
As our personal and financial lives increasingly move online, estate planning must evolve to address a new category of property: digital assets. From email accounts and social media profiles to cryptocurrency and cloud-stored business records, these assets often carry both financial and sentimental value. Yet, without proper planning, they can become inaccessible—or even lost—upon incapacity […]
Author: Marc J. Comer
The Role of Representation and Warranty Insurance in M&A Transactions
In today’s mergers and acquisitions market, representation and warranty (R&W) insurance has become a common feature of deal negotiations. Once used primarily in larger transactions, R&W insurance is now frequently incorporated into middle-market deals as buyers and sellers look for efficient ways to allocate risk and close deals. When structured properly, R&W insurance can help […]
Author: George McGowan
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.