Mayer Brown is representing Ally Financial Inc. in its efforts to strengthen its longer-term financial profile and accelerate repayments of the U.S. Treasury's investment. Such actions include representing Ally in the decision by Ally's mortgage subsidiary, Residential Capital, LLC (ResCap), to file for Chapter 11 reorganization. Ally, Ally Bank and all other Ally entities are not part of the ResCap Chapter 11 cases and there will be no change to Ally's business operations as a result of ResCap's action.

A key feature of ResCap's reorganization plan is a proposed settlement between Ally, certain other creditors and the ResCap debtors that provides for resolution of all claims between Ally and the ResCap debtors, as well as a release of all causes of action against Ally by third parties. Ally has also agreed to take certain steps to support the stability of ResCap and its leading mortgage servicing platform during the Chapter 11 process. Such steps include:

  • Making a cash contribution of $750 million to the ResCap Chapter 11 estate upon confirmation of the plan;

  • Making a stalking horse bid of up to $1.6 billion for a ResCap-owned portfolio of mortgage loans and various other assets;

  • Providing ResCap a $150 million debtor in possession financing facility; and

  • Supporting ResCap’s consumer lending originations.

Mayer Brown handled the corporate and finance aspects of the transactions. The team was led by Corporate & Securities partner Elizabeth Raymond (Chicago) and included: Banking & Finance – partner Chadwick Hoyt (Chicago), counsel David Linley (New York) and associates Todd Bundrant (Chicago) and Eric Reilly (Charlotte); Restructuring, Bankruptcy & Insolvency – partner Brian Trust (New York) and counsel Richard Ziegler (Chicago); Corporate & Securities – counsel Paul Chandler and associate Jessica Waller (both Chicago); and Litigation & Dispute Resolution – partners Richard Spehr and Michael Ware (both New York).