Nov 26 A group of creditors of Ally Financial
Inc's mortgage subsidiary is laying claim to cash from Ally
asset sales that was intended to help repay the U.S. government,
which funded a $17.2 billion bailout of the financing firm, the
Wall Street Journal reported.
The creditors of mortgage firm Residential Capital LLC
(ResCap) are eyeing more than $9 billion that Ally plans to
collect from sales of its international operations, the business
Ally, which is 74 percent owned by the U.S. government,
agreed to sell its European and Latin American auto lending
operations to General Motors Co's financing arm General
Motors Financial Co for about $4.2 billion last week.
The sale was part of Ally's efforts to speed up the
repayment of bailout funds. The company is focusing on its U.S.
business and has already sold operations in Canada and Mexico.
In a letter sent on Monday to Ally's board, the creditors
question transfers made in 2009 from Residential Capital to
Ally, the Wall Street Journal reported, citing people who have
reviewed the letter.
The creditors said Ally stripped ResCap of most of its value
when it transferred Ally Bank, a depository unit valued at $10
billion, to the parent company and asked the company to repay
them before others receive proceeds from Ally.
Ally, the former financing arm of GM, confirmed a letter had
been received and said the company disagreed with the creditors'
claims, although it did not elaborate on the content of the
"The letter from ResCap's unsecured creditors' committee is
a predictable tactic. We strongly disagree with the allegations
in the letter and believe the claims are wholly without merit,"
Ally spokeswoman Gina Proia said in an e-mailed statement.
Ally has maintained that it is insulated from ResCap's
liabilities because of their distinct ownership structures.
The Wall Street Journal said a representative for the
creditors' committee did not respond to a request for comment.
ResCap filed for bankruptcy in May and earlier this month a
bankruptcy court judge approved the sale of its mortgage
operations to Ocwen Financial Corp and Walter Investment
Management Corp for $3 billion.