Residential Capital’s Second Amended Joint Chapter 11 Plan became effective, and the Company emerged from Chapter 11 protection. The Court confirmed the Plan on December 11, 2013. According to the documents filed with the Court, “The Plan is the culmination of extensive, good faith negotiations guided by the Honorable James M. Peck, as mediator (the ‘Mediator’), among the Debtors, the Creditors’ Committee, Ally, and the Consenting Claimants. The terms of the Plan are premised upon Ally’s agreement to provide, in addition to the substantial financial and operational support already provided to the Estates throughout the Chapter 11 Cases, an additional contribution of $2.1 billion in plan funding, comprised of (1) $1.95 billion in Cash to be paid on the Effective Date of the Plan and (2) the first $150 million received by Ally for any Directors and Officers or Errors and Omissions claims it pursues against its insurance carriers related to the claims released in connection with the Plan; provided, that Ally guarantees that the Debtors (or the Liquidating Trust) will receive $150 million on account of such insurance claims, which guarantee shall be payable without defense, objection, or setoff on September 30, 2014 (collectively (1) and (2), (the ‘Ally Contribution’), in exchange for the Debtor Release and the Third Party Releases….In addition, the Plan settles a variety of highly complex disputes that have been a source of contention throughout the Chapter 11 Cases and which, if left unresolved, would have led to years of costly litigation and resulted in significant uncertainty and delays in distributions to creditors. Each of the settlements embodied in the Plan are dependent upon all others and, thus, constitute a Global Settlement (the ‘Global Settlement’) of the numerous issues resolved under the Plan. Absent the Ally Contribution, the Global Settlement would not be possible. The Second Amended Plan, among other things, reflects a settlement (the ‘JSN Settlement’) among the Plan Proponents and certain of the Junior Secured Noteholders, the Ad Hoc Group, the Junior Secured Notes Indenture Trustee, and the Junior Secured Notes Collateral Agent (each as defined in the Second Amended Plan).” This real estate financer filed for Chapter 11 protection on May 14, 2012, listing $15.7 billion in pre-petition assets.
About George Putnam
George Putnam, III the principle owner of New Generation Research, Inc., is a graduate of both Harvard Law School and Harvard Business School. He first became involved with distressed securities as a lawyer in the late 1970s. After seeing the inefficient niche that bankruptcies operated in, he founded New Generation Research, Inc. in 1986 with The Turnaround Letter and The Bankruptcy DataSource being the first offerings. Since then he has frequently been quoted in Barron’s, The Wall Street Journal, New York Times, USA Today and other financial publications for his thoughts on distressed and bankruptcy investing and research. In 1990, he was named investment advisor of the year by USA Today. In addition to his responsibilities at New Generation Research, Inc., Mr. Putnam also serves as a trustee for The Putnam Companies, a mutual fund group with over $100 billion in assets.