ResCap makes changes to Ally DIP loan based on sale closing timeline

By Caroline Salls

Pittsburgh, Dec. 13 - Residential Capital, LLC is seeking court approval of a stipulation that amends its debtor-in-possession financing facility from Ally Financial Inc., according to a Wednesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

Currently, the DIP loan and cash collateral order requires the company's plan of reorganization to take effect by Dec. 15. Failure to comply with that requirement within a five-day grace period would trigger a termination event.

ResCap said it plans to repay the DIP loan using proceeds of the sale of its whole loan portfolio to Berkshire Hathaway Inc. However, that sale is not required to close until Jan. 31.

The company said the parties plan to discuss the ongoing use of cash collateral before a Jan. 10 omnibus hearing.

Under the stipulation, the Ally Financial DIP loan must be repaid in full on the earlier of the closing of the loan portfolio sale and Jan. 10.

In addition, ResCap's right to use the cash collateral and DIP loan will terminate on the effective date of a plan of reorganization or on the earlier of the closing of the asset sale and March 31.

A hearing is scheduled for Dec. 19.

Residential Capital, a New York-based mortgage originator and servicer, filed for bankruptcy on May 14, 2012. Its case number is 12-12020.

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