17 Institutional Investors Obtain Agreement From Rescap Debtors To Stipulate To $8.7 Billion Allowed Claim For RMBS Trusts In Rescap Bankruptcy

HOUSTON, May 14, 2012 /PRNewswire/ -- Today, seventeen institutional investors (RMBS Holders) represented by Gibbs & Bruns LLP and Ropes & Gray LLP announced they had achieved an agreement with Residential Capital LLC and its affiliated debtors (Debtors) to grant an $8.7 billion allowed claim to 392 residential mortgage backed securities trusts (the "Covered Trusts") issued by affiliates of the Debtors during the period from 2004 to 2008. The RMBS Holders hold, or manage investments for holders of, more than $13 billion in outstanding RMBS securities issued by over 350 of the Covered Trusts.

The settlement involves the following key terms:

1. The allowed claim will settle claims related to breaches of representations and warranties in the origination and securitization of residential mortgage loans in the Covered Trusts;
2. The RMBS Holders will support the Debtors' plan of reorganization, so long as certain other settlements benefitting the Debtors' estates are included in such plan;
3. Where the RMBS Holders have the holdings permitting them to do so, they will direct the relevant Indenture Trustee for the Covered Trusts to accept the settlement and compromises set forth in the Settlement Agreement;
4. The settlement is subject to review and will not become effective as to a Covered Trust unless it is accepted by the Indenture Trustee for that trust. The decision whether to accept the settlement will be entirely within the relevant trustee's independent judgment as a prudent person; and,
5. The settlement must be approved by the Bankruptcy Court.

The Debtors will file a motion to approve the settlement agreement within days of the Petition Date. The Debtors believe this settlement is in the best interests of the Debtors, their estates, their creditors, and other stakeholders, will avoid all-consuming litigation, and will assist in the orderly confirmation of a chapter 11 plan. Kathy Patrick, lead counsel for the RMBS Holders, said, "Our clients are pleased that another financial institution has acknowledged the importance of resolving mortgage repurchase liabilities. A resolution of these claims is in the best interests of the RMBS Trusts and all of their certificateholders."

The parties to the settlement are represented by the following counsel and firms:

RMBS Holders: Kathy Patrick, Robert Madden, Scott Humphries and David Sheeren of Gibbs & Bruns LLP; Keith Wofford and Ross Martin of Ropes & Gray LLP

Debtors: Gary Lee, Jamie Levitt, Tony Princi and Larren Nashelsky of Morrison & Foerster LLP.

Ally Financial, Inc.: Rick Cieri, Ray Schrock and Noah Ornstein of Kirkland & Ellis LLP

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SOURCE Gibbs & Bruns, LLP