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Bankruptcy judge confirms ResCap liquidation plan

Bankruptcy judge confirms ResCap liquidation plan

December 11th, 2013 in News

A U.S. bankruptcy court judge has confirmed Residential Capital's plan to exit Chapter 11 bankruptcy.

The signing of the order Wednesday marks the court's formal approval and a major milestone in the bankruptcy of the troubled mortgage lending and service company. ResCap filed for bankruptcy protection in May 2012 under the weight of toxic mortgages.

It also closes a messy chapter for Ally Financial, which cut ties with ResCap after the subsidiary filed for bankruptcy protection. Ally is the former finance arm of General Motors that now operates as a bank after a government bailout.

Ally reached an agreement with creditors earlier this year that allowed ResCap to file a liquidation plan.

Ally said Wednesday that the court's approval releases it from all related mortgage claims against the company.