Ally Financial Inc. has fired back at creditors of its mortgage subsidiary, Residential Capital, who argue that they should receive proceeds from a string of Ally asset sales before it repays the U.S. government's bailout, according to a Dow Jones Newswire report yesterday. Ally, the former in-house financing arm for General Motors Co. (GM), has been selling international businesses in an effort to slim down and repay a $17.2 billion government rescue. But creditors of ResCap, Ally's subprime mortgage lender that filed for chapter 11 bankruptcy in May, claim that they have a right to the proceeds, alleging that Ally stripped ResCap of valuable assets, including an ownership stake in Ally's depository institution, before its filing. Ally isn't part of the bankruptcy and has maintained that it and ResCap were separate companies with their own management and boards, arguing that claims that it raided ResCap of assets lack merit and that its recent asset sales aren't subject to ResCap's bankruptcy proceedings. Creditors argue that Ally stripped ResCap of most of its value when it transferred Ally Bank to the parent company from the mortgage company unit in a transaction completed in 2009. The transaction is among the deals that Arthur J. Gonzalez, the court-appointed examiner in ResCap's bankruptcy, is investigating as part of his review, which is expected to be completed in April.
