Treasury Says It Would Back Bankruptcy Plan For ResCap

Law360, New York (May 7, 2012, 9:10 PM EDT) -- The U.S. Department of the Treasury would support a bankruptcy filing for Ally Financial Inc.'s troubled mortgage unit Residential Capital LLC, a Treasury official said Monday.

The Treasury — which owns 74 percent of ResCap's common equity after a 2008 and 2009 bailout of almost $17 million — would back an insolvency plan if the company's board chooses that route, according to the official.

An Ally spokeswoman declined to comment on the matter.

Ally, the former financing arm of General Motors Co., has been attempting to...
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