ResCap Urges 2nd Circ. To Block Feds' Suit

Law360, New York (June 12, 2013, 8:06 PM EDT) -- Bankrupt mortgage lender Residential Capital LLC asked the Second Circuit Wednesday to stop the Federal Housing Finance Agency from suing its affiliates, arguing the lawsuit has the potential to deplete its assets.

ResCap’s affiliates should be protected by an automatic stay on litigation that occurs when a company enters bankruptcy, a lawyer for the company told a panel of judges in oral arguments.

Instead, a court allowed a government suit against nonbankrupt affiliates to go forward, which has the potential of hurting the still-restructuring ResCap, Deanne...
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