NEW YORK, June 26, 2013 /PRNewswire/ -- The plan support agreement (PSA) entered into by Ally Financial Inc. (Ally), Residential Capital, LLC (ResCap) and ResCap's major creditors was approved today by the Honorable Judge Martin Glenn in the U.S. Bankruptcy Court. The Chapter 11 plan (Plan) will provide broad releases for Ally from mortgage-related issues.
Ally is highly encouraged by this pivotal court approval, which enables all parties involved to move forward to the final stages of ResCap's Chapter 11 cases and resolve the associated mortgage-related issues. Significantly, this agreement represents a consensual, global settlement that was reached through the court's mediation process overseen by the court's appointed mediator, the Honorable James Peck, and included 18 groups of ResCap's most significant creditors, as well as the fiduciaries for the ResCap Chapter 11 estates and ResCap's unsecured creditors. Among others, these parties include the official unsecured creditors' committee, residential mortgage-backed securities trustees and investors, monoline insurers and substantial senior unsecured noteholders.
Consistent with the terms of the PSA, on June 13, 2013, ResCap paid Ally approximately $1.13 billion to satisfy Ally's substantial claims against ResCap on account of its secured credit facilities provided to ResCap. As previously stated and subject to court approval of the Plan, Ally has agreed to contribute $1.95 billion in cash to the ResCap estate, as well as the first $150 million from insurance proceeds Ally is pursuing related to insurable losses, in exchange for broad releases under the plan from potential mortgage-related claims against Ally related to ResCap's businesses. Ally will make the payment to ResCap on the effective date of the Plan, which is expected to occur in the fourth quarter of this year.
SOURCE Ally Financial