On Air Now

Upcoming Shows

Program Schedule »

Tune in to Listen

650 AM Hibbing, Minnesota

Weather

Current Conditions(Hibbing,MN 55746)

More Weather »
70° Feels Like: 70°
Wind: N 9 mph Past 24 hrs - Precip: 0”
Current Radar for Zip

Tonight

Showers Early 59°

Tomorrow

Cloudy 75°

Sat Night

Mostly Cloudy 59°

Alerts

  • 0 Severe Weather Alerts
  • 0 Cancellations

Ally, ResCap creditors race to finalize settlement

(Reuters) - Ally Financial Inc must sign a deal to resolve claims that it owes billions of dollars to creditors of its Residential Capital LLC unit by 11 a.m. EDT Tuesday (1500 GMT) to avoid the publication of a potentially damaging report into its role in ResCap's bankruptcy.

Negotiations between the auto lender, which is three-quarters owned by the U.S. government, and creditors of its home lending subsidiary have already dragged beyond an initial deadline of Friday.

At the same time, a court-appointed independent examiner was expected to publish his report into claims that Ally stripped ResCap of valuable assets and loaded it with liabilities before it was put into bankruptcy, short-changing creditors.

That report's publication was postponed from Friday's initial deadline to allow more time for mediated talks between Ally and ResCap creditors.

The examiner's report was filed on Monday, but under seal. If Ally reaches a deal with ResCap creditors, the report will remain under seal at least until May 21. Without a deal, the report will be unsealed at 11 a.m., according to an order by U.S. Bankruptcy Judge Martin Glenn.

A settlement between Ally and ResCap's creditors would form the basis of a plan to allow ResCap to exit bankruptcy and repay its creditors, which includes about $3 billion owed to bondholders.

In addition, investors who bought mortgage bonds issued by ResCap claim they are owed money because they were misled about the quality of the mortgages backing those bonds.

The settlement would allow Ally to put behind it problems tied to mortgage lending so it can focus on its U.S. auto lending business.

Ally has raised billions of dollars by selling its international business and wants to use that money to repay the U.S. government.

The U.S. government rescued Ally, formerly known as General Motors Acceptance Corp , in the wake of the 2008 financial crisis with a $17 billion bailout.

(Reporting By Tom Hals in Wilmington, Delaware; Editing by Maureen Bavdek)

Comments