Ally Financial Enters Comprehensive Settlement to Resolve ResCap-Related Matters
NEW YORK, May 14, 2013 /PRNewswire/ -- Ally Financial Inc. (Ally) today announced that it has entered into a comprehensive plan support agreement with the Residential Capital, LLC (ResCap) estate and its major creditors to support a Chapter 11 plan in ResCap's Chapter 11 cases. The plan will settle all existing and potential claims between Ally and ResCap and all potential claims held by third parties related to ResCap that could be brought against Ally and subsidiaries that are not Chapter 11 debtors, except for securities claims by the Federal Housing Finance Agency (FHFA) and the Federal Deposit Insurance Corporation (FDIC), as receiver for certain failed banks.
The plan support agreement and Chapter 11 plan is subject to approval by ResCap's Bankruptcy Court and definitive documentation. The parties have agreed under the plan support agreement to keep the terms confidential until the debtors file a motion to approve the plan support agreement, which is expected to occur next week. The economic consideration payable by Ally, however, is not subject to further negotiation.
"This agreement is a seminal moment for Ally," said Chief Executive Officer Michael A. Carpenter. "We are pleased to have reached a consensual and comprehensive agreement that enables the company to put the issues related to the mortgage industry behind us. We remain confident in our strategic direction going forward and in the market position we hold with our leading dealer financial services and direct banking franchises. These franchises are the cornerstones of Ally's future success."
Carpenter continued, "I also would like to thank the Honorable James Peck for his tireless efforts to resolve this complex mediation, without which the parties would not have reached this positive outcome for all concerned."
The settlement was reached as part of the mediation with ResCap and its creditors. The plan fully releases Ally from any claim that could be brought by ResCap, including all representation and warranty claims that reside with ResCap, and all claims held by third parties related to ResCap, other than securities claims against Ally and its subsidiaries that are not Chapter 11 debtors from FHFA and the FDIC. Ally believes it has strong defenses against these claims and will vigorously defend its position, as necessary.
The parties to the comprehensive settlement include: Ally and its consolidated subsidiaries, ResCap and its affiliated debtor entities, the official committee of unsecured creditors, AIG Asset Management (U.S.), LLC, Allstate Insurance Company, Financial Guaranty Insurance Company, which intends to execute the agreement pending regulatory approval, counsel to the putative class of persons represented in the consolidated class action entitled In re: Community Bank of Northern Virginia Second Mortgage Lending Practice Litigation, filed in the United States District Court for the Western District of Pennsylvania, MDL No. 1674, Case Nos. 03-0425, 02-01201, 05-0688, 05-1386, Massachusetts Mutual Life Insurance Company, MBIA Insurance Corporation, Paulson & Co. Inc., a holder of Senior Unsecured Notes issued by ResCap, Prudential Insurance Company of America, certain investors in RMBS backed by mortgage loans held by securitization trusts associated with securitizations sponsored by the Debtors between 2004 and 2007 represented by Kathy Patrick of Gibbs & Bruns LLP and Keith H. Wofford of Ropes & Gray LLP, Talcott Franklin of Talcott Franklin, P.C. as counsel for certain RMBS investors, Wilmington Trust, National Association in its capacity as Indenture Trustee for the Senior Unsecured Notes, and certain trustees or indenture trustee for certain mortgage backed securities trusts.
About Ally Financial Inc.
Ally Financial Inc. is a leading automotive financial services company powered by a top direct banking franchise. Ally's automotive services business offers a full suite of financing products and services, including new and used vehicle inventory and consumer financing, leasing, inventory insurance, commercial loans and vehicle remarketing services. Ally Bank, the company's direct banking subsidiary and member FDIC, offers an array of deposit products, including certificates of deposit, savings accounts, money market accounts, IRA deposit products and interest checking. Ally's Commercial Finance unit provides financing to middle-market companies across a broad range of industries.
With approximately $166.2 billion in assets as of March 31, 2013, Ally operates as a bank holding company. For more information, visit the Ally media site at http://media.ally.com or follow Ally on Twitter: @Ally.
SOURCE Ally Financial