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
Supreme Court and Title VII: Implications for Reverse Discrimination
Earlier this month, the U.S. Supreme Court issued a decision in Ames v. Ohio Department of Youth Services vitiating the so-called “background circumstances” test required by half of federal circuit courts.1 The background circumstances test required majority group plaintiffs pleading discrimination under Title VII of the Civil Rights Act to meet a heightened pleading standard […]
Author: Matthew F. Mimnaugh
SPACs Are Back, What You Need to Know
Special purpose acquisition companies (better known as SPACs) appear to be making a comeback. SPAC offerings for 2025 have already nearly surpassed last year’s totals, with additional transactions in the pipeline. SPACs last experienced a boom between 2020–2021, with approximately 600 U.S. companies raising a record $163 billion in 2021. Notable companies that went public […]
Author: Dan Brecher
Short Form Merger: Streamlining the Process for Businesses
Merging two companies is a complex legal and business transaction. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process that involves important corporate governance considerations. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process. However, […]
Author: Dan Brecher
Tariff Response Options for Small Businesses Facing Financial Distress
The Trump Administration’s new tariffs are having an oversized impact on small businesses, which already tend to operate on razor thin margins. Many businesses have been forced to raise prices, find new suppliers, lay off staff, and delay growth plans. For businesses facing even more dire financial circumstances, there are additional tariff response options, including […]
Author: Brian D. Spector
Common Causes of Partnership Disputes and How to Resolve Them
Business partnerships, much like marriages, function exceptionally well when partners are aligned but can become challenging when disagreements arise. Partnership disputes often stem from conflicts over business strategy, financial management, and unclear role definitions among partners. Understanding Business Partnership Conflicts Partnership conflicts place significant stress on businesses, making proactive measures essential. Partnerships should establish detailed […]
Author: Christopher D. Warren
Businesses Are Facing Financial Headwinds—A Practical Guide
*** The original article was featured on Bloomberg Tax, April 28, 2025 — As a tax attorney who spends much of my time helping people and companies who have large, unresolved issues with the IRS or one or more state tax departments, it often occurs to me that the best service that I can provide […]
Author: Scott H. Novak
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.