ResCap stipulation ends Ally DIP facility commitment, extends cash use

By Caroline Salls

Pittsburgh, Feb. 13 - Residential Capital, LLC requested court approval of a stipulation under which its Ally Financial Inc. debtor-in-possession facility and cash collateral order would be amended to allow continued use of cash collateral and termination of the DIP loan commitments, according to a Feb. 12 filing with the U.S. Bankruptcy Court for the Southern District of New York.

ResCap said the DIP facility was repaid in full on Feb. 5 from the proceeds of its loan origination and servicing platform sale.

The company said it is in talks regarding the terms governing the ongoing use of cash collateral following the expected Feb. 15 closing of its legacy loan portfolio sale.

Under the stipulation,

• All commitments related to the Ally DIP facility are terminated, and the ResCap debtors are no longer authorized to borrow money under that loan;

• The debtors, junior secured parties, the Ally Financial lender and ResCap's official committee of unsecured creditors will continue to negotiate to enter into an agreement by March 18 on a revised expense allocation methodology that will take effect after March 18;

• The borrowers' right to use pre-bankruptcy collateral, including cash collateral, will automatically terminate on the earliest of the effective date of a plan of reorganization, March 18 or upon written notice by the lender, or, if an Ally revolving credit facility has been paid in full, by the junior secured parties after the occurrence of an event of default beyond any applicable grace period; and

• Following the closing of the platform sale, the ResCap debtors will deliver monthly six-month forecasts, collateral reports and variance reports to adequate protection parties and the committee.

The stipulation will be presented to the court for approval on Friday.

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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