ResCap Bondholders Drop Backing Of Ch. 11 Plan

Law360, New York (September 27, 2012, 6:29 PM EDT) -- Third-lien bondholders of Residential Capital LLC have dropped their support for the Ally Financial Inc. unit's Chapter 11 plan in order to preserve their ability to capitalize on bond-trading, freeing Ally from subordinating its recovery by $350 million, the parent announced Thursday.

The move undoes an announcement that came with ResCap's May 14 bankruptcy filing that the company had obtained support for its prepackaged restructuring plan from the ad hoc steering committee representing the junior secured notes and other noteholders. At the time, Ally said it...
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