Bankruptcy Judge Approves ResCap Deal With FGIC

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Bankruptcy Judge Approves ResCap Deal With FGIC

by Joel R. Glucksman on September 27, 2013

A bankruptcy judge has approved a $596.5 million deal between Financial Guaranty Insurance Co and bankrupt Residential Capital LLC, putting an end to billions of dollars of claims associated with mortgage-backed securities. The settlement also resolved another $1.3 billion in claims related to trusts insured by FGIC, the former bond insurance unit of FGIC Corp.

The settlement faced significant opposition from holders of junior secured notes that were issued by ResCap, Reuters reports. The opponents argued that Judge Martin Glenn should have rejected the multimillion-dollar settlement because ResCap allegedly overestimated the amount it owed to bond insurer FGIC. The noteholders also asserted that the deal was not properly negotiated, Reuters added.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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