NEW YORK (1/7/13)--The National Credit Union Administration (NCUA) filed a motion Friday in a New York bankruptcy court to join other creditors' motion seeking compensation for losses incurred before Residential Capital LLC filed for bankruptcy.
The New York City-based ResCap is the subprime mortgage subsidiary of Ally Financial Inc., the former mortgage unit of GMAC. ResCap filed for Chapter 11 bankruptcy on May 14 (Dow Jones Newswires
NCUA's motion and the creditors' original motion were filed in U.S. Bankruptcy Court, Southern District of New York, Manhattan.
According to the motion filed, the agency is acting as the liquidating agent for the now defunct Western Corporate FCU and U.S. Central FCU, which bought residential mortgage-backed securities (RMBS) that caused losses contributing to the two corporates' collapse. The court document indicates that NCUA is holding about $300 million in fraud and other claims under state and federal securities laws and common law.
The original motion seeking compensation was brought by AIG Asset Management (U.S.) LLC, The Allstate Entities, Massachusetts Mutual Life Insurance Co. and the Prudential Entities. It seeks two things:
- An order that would classify RMBS fraud claims in the same class as the securitization trust claims for purposes of any Chapter 11 plan for debtors; and
- A direction that misrepresentation claims cannot be placed in a plan class that will be subordinated (to other creditors).
A mediator was appointed in late November to handle the reconstruction negotiations (Dow Jones Newswires