Ally Deal Has Paulson's Backing

May 24 2013 | 10:39am ET

Ally Financial has reached a deal with Paulson & Co. and other creditors of its bankrupt subprime mortgage business.

Ally, the former General Motors Acceptance Corp., will pay $2.1 billion to settle allegations by the creditors that it stripped its Residential Capital unit of assets before putting it into bankruptcy protection. The offer is three times what Ally originally proposed to pay the creditors, and seeks to ensure that ResCap can emerge from bankruptcy without further legal headaches for Ally.

"Reaching this comprehensive agreement enables Ally to turn the page on a tumultuous chapter in its history that was severely impacted by the issues in the mortgage industry," Ally CEO Michael Carpenter said.

The deal must still be approved by a court, and while ResCap's hedge fund creditors and others are behind it, some, including Berkshire Hathaway, are not. Berkshire has asked that a report on the alleged asset-stripping be unsealed so that creditors could judge the fairness of yesterday's offer.


In Depth

Royalties: The Alternative Assets of the Music Industry

Jul 8 2016 | 7:01pm ET

Recent market volatility has investors seeking greater insight into alternative...

Lifestyle

Vortic: Making Great American Watches Again

Jul 25 2016 | 6:29pm ET

If you are compelled by stories of entrepreneurial vision & drive, or simply...

Guest Contributor

MPI: Like Stellar Returns? Better Understand the Risks First

Jul 22 2016 | 8:44pm ET

When the press reports extraordinarily strong relative or risk-adjusted returns...