Bloomberg News

ResCap Junior Notes Projected to Get 105 Cents on the Dollar

May 15, 2012

Residential Capital LLC, the bankrupt mortgage unit of Ally Financial Inc. (ALLY:US), could pay 105 cents on the dollar to junior secured guaranteed note holders under the company’s bankruptcy plan announced yesterday.

The 9.625 percent notes due 2015 are projected to pay out par plus accrued, including 93 cents on the dollar of secured recovery and another 12 cents in unsecured funds, according to a document by Houlihan Lokey and obtained by Bloomberg News. The figures used estimated market values as of Dec. 31, 2012, according to the document.

ResCap, run by Chief Executive Officer Thomas Marano, sought court protection yesterday after losses piled up on subprime and Alt-A mortgages that were bundled into bonds during the credit crisis. Ally CEO Michael Carpenter is counting on the Chapter 11 reorganization to separate his firm from ResCap so he can pursue plans for an Ally turnaround -- including repayment of the $17.2 billion U.S. bailout -- without the threat of more damage from mortgages.

The secured payout to junior secured bondholders includes 50 percent recovery by January 2013, with the remainder stretching to July 2014, according to the document. The note holders are ultimately projected to recover $2.22 billion, according to the estimate.

The document was prepared by Houlihan Lokey for White & Case LLP, which represented a bondholder group holding the notes including John Paulson’s Paulson & Co. and David Tepper’s Appaloosa Management LP.

To contact the reporter on this story: Dakin Campbell in San Francisco at

To contact the editor responsible for this story: David Scheer at

Best LBO Ever

Companies Mentioned

  • ALLY
    (Ally Financial Inc)
    • $23.92 USD
    • -0.04
    • -0.17%
Market data is delayed at least 15 minutes.
blog comments powered by Disqus