The bankruptcy of a major mortgage lender has been challenged, hours before the deadline for objections.
ResCap, the defunct mortgage unit of Ally Financial, plunged into bankruptcy in May last year. But according to Law360, challenges have been raised to the company's Chapter 11 plan amid objections that the bankruptcy's structure would prohibit claims against Ally.
One of the companies challenging the plan, Impac Mortgage Holdings, said the plan would allow Ally to evade any litigation not directly related to its mortgage unit's bankruptcy.
“No matter how desirable such a release may be from the perspective of the debtors, Ally, and other parties to the debtors' reorganization, under settled law the court is without subject matter jurisdiction to approve or order such a release,” Impac said.
Insurers also took aim at the plan, Law360 said. Several insurers with ties to ResCap's predecessor GMAC, GM's former lending unit, said the plan failed to include language that would keep their position in respect to ResCap's insurance-related matters neutral.