Consumers Raise Legal Claims At Ditech Ch. 11 Confirmation

Law360 (August 7, 2019, 9:23 PM EDT) -- Ditech Holding Corp. and a committee of its customers clashed in a New York bankruptcy court Wednesday over whether the law allows Ditech to sell its business free of legal claims it mishandled customers' mortgages.

In a standing-room-only hearing before U.S. Bankruptcy Court Judge James L. Garrity Jr., the two sides disputed whether the Bankruptcy Code allows Ditech's mortgage origination and servicing business to shed customer legal claims in their bankruptcy sale and if the company's Chapter 11 plan will fall apart if they can't.

Ditech filed for bankruptcy in February, blaming an unsustainable debt load.

In its Chapter 11 plan,...

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