Elliott Fights Ally-Fortress Plan For Mortgage Lender

Mar 27 2012 | 11:08am ET

Elliott Management has thrown its weight against a plan that would see Fortress Investment Group buy Ally Financial's mortgage business.

The New York-based hedge fund, which owns 2.3% of the former GMAC Financial, isn't opposed to Fortress acquiring the assets, per se. But it objects to Ally's plan to sell the unit out of bankruptcy to the alternative investments giant, Reuters reports.

In a letter to Ally's board of directors last week, Elliott warned that a bankruptcy filing for the mortgage unit, Residential Capital, would lead to a long legal battle and make an initial public offering for Ally "nearly impossible" for years to come.

"We believe the board greatly overestimates its chances of successfully managing a clean and efficient process in bankruptcy," Elliott wrote. "A large, complex bankruptcy with multitudes of contentious litigation would foreclose the possibility of an IPO or sale of the assets or equity of Ally for at least two years."

In particular, Elliott questioned Ally's claims that it and ResCap are separate entities, predicting that ResCap creditors would go after Ally assets in a bankruptcy process.

Instead of placing ResCap into bankruptcy, Elliott said, Ally should seek an out-of-court debt exchange and the sale of ResCap's assets to a financial institution.

Talks between Ally and Fortress are ongoing. New York-based Fortress could pay more than $1 billion for the ResCap assets it wants, and might merge them into its Nationstar Mortgage Holdings business.


In Depth

Q&A: Open Season For Closed-End Funds

Aug 29 2014 | 10:00am ET

When Maury Fertig and Bob Huffman, former Salomon Brothers coworkers, launched...

Lifestyle

Och Funds Women In Finance Initiative At U-M

Aug 28 2014 | 3:01pm ET

Och-Ziff Capital founder Daniel Och and his wife have made a "generous donation"...

Guest Contributor

Looking Ahead: What’s In Store For Managed Futures?

Aug 22 2014 | 12:52pm ET

The last five years were phenomenal for investors in equity indices. Will the next...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

July/August 2014 Cover

The time was right

Commodities/Futures magazine launched at the precipice of a revolution in the futures industry—really a revolution in the idea of risk management—that would move it from a small niche industry to ...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.