Bloomberg News

Capmark’s $4 Billion Reorganization Plan Wins Court Approval

August 20, 2011

Aug. 20 (Bloomberg) -- Capmark Financial Group Inc., the commercial lender once a part of General Motors Corp., persuaded a judge to let it exit bankruptcy by giving creditors cash, stock and new debt worth a total of almost $4 billion.

U.S. Bankruptcy Judge Kevin Gross said he would sign an order approving the plan next week after attorneys make minor wording changes to the documents.

After almost two years in bankruptcy, the company will reorganize around its Utah-based bank and will be owned by creditors, including unsecured noteholders and lenders. Those creditors voted overwhelmingly in favor of the plan, attorney Thomas Moers Mayer, who represented the official committee of unsecured creditors, said.

“Everyone is pleased with the result,” Capmark’s bankruptcy attorney Michael P. Kessler said in an interview after yesterday’s hearing in Wilmington, Delaware. “It was an extremely complicated case.”

Capmark, based in Horsham, Pennsylvania, became partly owned by affiliates of New York-based Goldman Sachs Group Inc. when the bank and a group of investors bought 78 percent of Capmark, then called GMAC Commercial Mortgage, in 2006 for $1.5 billion in cash and the repayment of $7.3 billion of debt.

Cash, New Debt

Under the plan, creditors will split $900 million in cash, new debt securities of $1.25 billion and stock in the reorganized company, estimated to be worth about $1.83 billion. The company may implement the plan, and pay the creditors, by Sept. 30, Kessler said.

While in bankruptcy, Capmark sold its loan-servicing unit to Warren Buffett’s Berkshire Hathaway Inc. and Leucadia National Corp. in a deal valued at $468 million.

The creditors committee also battled with Goldman Sachs over how to handle so-called insider preference claims -- lawsuits sometimes brought against company insiders, including equity holders, accused of wrongly taking money from the company in the months before the bankruptcy filing.

The right to file any insider claims passes to the new company, under the plan.

“It was clear that it was an extremely intricate case,” said Gross, who presided over the hearing because U.S. Bankruptcy Judge Christopher Sontchi wasn’t available.

The case is In re Capmark Financial Group Inc., 09-13684, U.S. Bankruptcy Court, District of Delaware (Wilmington).

--Editors: Fred Strasser, Glenn Holdcraft

To contact the reporter on this story: Steven Church in U.S. Bankruptcy Court in Wilmington, Delaware, at

To contact the editor responsible for this story: Stephen Farr at

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