Bankruptcy Judge Martin Glenn on Friday approved Residential Capital LLC's $596.5 million mortgage-backed securities settlement with bond insurer Financial Guaranty Insurance Co.(FGIC), Dow Jones Newswires reported on Friday. ResCap struck a deal with the FGIC in June that cuts the bond insurer's $5.55 billion claim against its estate to $ 596.5 million. The agreement also resolved another $1.3 billon in claims related to trusts insured by FGIC, the former bond insurance unit of FGIC Corp. A group of ResCap's junior bondholders had challenged the deal on the grounds that it wasn't in the best interests of the estate. The bondholders argued that if ResCap's creditor payback plan wasn't approved, FGIC would be free to go after claims worth much more than the $596.5 million. A group of hedge funds with investments secured by FGIC had also challenged the deal, but it withdrew its objection earlier this week.
