ALERT
BANKRUPTCY PETITION FOR OFFICIAL BORROWER COMMITTEE
In re: U.S. Bankruptcy Court Southern District of New York (Manhattan)
Bankruptcy Petition #: 12-12020-mg
Debtor-Residential Capital, LLC aka Residential Capital Corporation
Subsidiary List – See Attached Exhibit A
1177 Avenue of the Americas
New York, NY 10036
NEW YORK-NY
Tax ID / EIN: 20-1770738
Robert Brown, a consumer attorney based in New York will bring the motion for an Official Borrower Committee in the Residential Capital, LLC bankruptcy case. He has experience in lender liability litigation and bankruptcy practice.
Robert E. Brown, Esq.
Law Offices of Robert E. Brown, PC
44 Wall Street
, 12th Floor
18 Mott Street
, 2nd Floor
Wall Street (212) 766-9779
Mott Street
/Chinatown (347) 488-6969
Staten Island (718) 979-9779
Facsimile (718) 979-9784
All homeowners who believe they have claims against one of the entities listed on EXHIBIT “A” qualify to participate in the motion to appoint a Borrower Committee. There is no cost to any participant (homeowner) and if the committee motion is granted the debtor in this case, Residential Capital and subsidiaries will pay for the committee expenses pursuant to 11 U.S.C. § 503(b)(4).
Claimants that have lawsuits pending have standing to participate in this motion. Furthermore,
homeowners who believe that they have claims, including illegal foreclosure, but do not have a lawsuit pending may still qualify.
Time is of the essence as events are already unfolding which may affect borrower rights. Those events include an $8.7 billion settlement couched as a claim, wherein ResCap and Ally will agree not to challenge repurchase claims with large institutional creditors. Another important issue is the bankruptcy may release Residential Capital, LLC and Ally Financial Inc. from the nationwide loan-servicing and foreclosure settlement.
Bankruptcy law allows for formation of Official Committees in a chapter 11 bankruptcy cases to represent various classes of claimants. In lender bankruptcies it is typical that Indenture Trustees, insurers and large bank claims dominate the committee for the unsecured creditors. The borrowers are included under this committee. Understandably this creates conflicts of interest if the borrower claim is directly against not only the bankrupt entity, but may also be against a Trustee, insurer or bank seated on the committee.
In the American Home Mortgage bankruptcy case, the judge determined that inherent conflicts of interest existed and appointed a separate committee to represent only borrowers. This was the only lender bankruptcy case to date where this occurred. Paula Rush was the driving force behind that committee, served as Chairperson of that Committee, and she will be assisting Robert Brown in the formation of a committee in this case. You may reach Paula to answer any questions you may have at 443-676-3509.
To begin, you only agree to have your client’s name included on the motion for appointment
of the committee and prepare a paragraph of background relating to the violations asserted resulting in a claim to be included in the motion. A hearing will be scheduled for the motion and you may attend the hearing, but you do not have to attend. The attorney bringing the motion will argue it before the court on behalf of all participants on the motion.
After the committee motion is granted, the U.S. Trustee will send out questionnaires to ask if you would like to serve on the committee. You do not have to serve on the committee as it is voluntary. Anyone can serve on the committee regardless of what state you are in. Meetings are held via conference calls to discuss what actions the committee will take as the bankruptcy progresses.
For more information, you may contact:
Robert Brown 212-766-9779
Paula Rush 443-676-3509
EXHIBIT A
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