ResCap plan amended to revise treatment for junior secured noteholders

By Caroline Salls

Pittsburgh, Dec. 3 - Residential Capital, LLC and its official committee of unsecured creditors filed an amended joint plan of reorganization Tuesday with the U.S. Bankruptcy Court for the Southern District of New York that changes the proposed treatment for holders of junior notes claims.

Under the previous version of the plan, holders of junior secured notes claims were to be paid in full in an amount determined by the bankruptcy court.

Under the amended plan, the indenture trustee will distribute a junior secured notes distribution.

According to the amended plan, the junior secured notes distribution will consist of $1,247,506,575 in cash, which represents $2,222,506,575 of principal, interest and fees owed as of the bankruptcy filing date, plus $125 million in settlement of all claims for post-bankruptcy interest and unpaid fees and other charges, less $1.1 billion previously paid.

As previously reported, the plan is premised on Ally Financial Inc.'s agreement to provide an additional contribution of $2.1 billion in plan funding.

In addition, the company said the plan settles a variety of highly complex disputes.

Creditor treatment

Treatment of creditors under the amended plan will include the following:

• Administrative, secured and priority claims will be paid in full;

• Holders of junior secured notes claims will receive a share of a junior secured notes distribution;

• Holders of general unsecured claims will receive a share of a unit distribution;

• Holders of borrower claims will receive cash distributions from a borrower claims trust;

• Holders of private securities claims will receive either cash distributions from a private securities claims trust or units will be transferred to the trust for distribution;

• Holders of NJ Carpenters' claims will receive a claims distribution, which will then be distributed under a plan of allocation, subject to NJ Carpenters' approval.

Without approval, the claims in this class will be treated as general unsecured claims, but may be subject to subordination;

• Holders of general unsecured convenience claims against the ResCap debtors will recover 36.3% in cash, holders of general unsecured convenience claims against the GMACM debtors will recover 30.1% in cash, and holders of general unsecured convenience claims against the RFC debtors will recover 9% in cash;

• Holders of ETS unsecured claims against the GMACM debtors will receive a share of cash equal to the value of assets available at ETS that exceed the amount of allowed claims senior in right of payment to the unsecured claim;

• Holders of equity interests and intercompany balances will receive no distribution;

• Holders of Federal Home Loan Mortgage Corp. (FHFA) claims will waive any recovery; and

• Any payment under an Ally revolving credit facility secured claim paydown order will be approved and allowed, provided that the holders of revolver claims will waive any right to receive additional interest or fees on account of those claims.

Residential Capital, a New York-based mortgage originator and servicer, filed for bankruptcy on May 14, 2012. Its case number is 12-12020.

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