Not long after the U.S. Trustee granted its petition to create a committee to protect consumer interests in its bankruptcy proceedings, Ditech filed a motion objecting to such a committee, asking that it be disbanded or, alternatively, that the scope of its involvement be limited, HousingWire.com reported. The consumer committee drama began last month when several advocacy groups filed petitions with the U.S. Trustee asking for the creation of a committee to represent the interests of the mortgage borrowers who have loans with Ditech or its subsidiaries. Among those seeking representation were Chicago-area victims of a reverse mortgage scam whose loans were being serviced by Ditech subsidiary Reverse Mortgage Solutions. The representative of some of those victims, J. Samuel Tenenbaum of Northwestern’s Complex Civil Litigation and Investor Protection Center, said such a committee was necessary to protect the rights of these borrowers, who are mostly elderly, disabled or financially unstable, and therefore vulnerable. In response, the Trustee approved of the creation of a five-member consumer committee on May 2, but the ink was barely dry before Ditech filed its objection, claiming that the Trustee’s move was “arbitrary and capricious” and would have a chilling effect on Ditech’s attempts to sell off portions of its business. If the court will not disband the committee, Ditech asked that the committee’s scope be limited and its fees and expenses capped at $250,000.
A dispute between the bankrupt shell company left behind after Edward Lampert’s purchase of Sears Holdings Corp.’s top stores and a number of foreign vendors is heating up, the Wall Street Journal reported. The suppliers filed court papers last week seeking to compel payment for merchandise purchased during or just before bankruptcy and objecting to the disclosure statement, which lays out the Sears bankruptcy estate’s reorganization plan. Apex Tool Group LLC, the maker of Craftsman-branded tools; Winners Industry Co., a China-based maker of custom Christmas trees; and Gokaldas Exports Ltd. and Pearl Global Industries Ltd., both Indian apparel makers; are looking to force Sears to pay them for goods delivered after Sears entered bankruptcy or within 20 days before filing for court protection. All four suppliers argue that their claims for payment should be treated as administrative expenses, which have top priority in a bankruptcy because of the timing of the deliveries, according to court filings. The dispute has been brewing since last year and is coming to a head as the Sears bankruptcy estate attempts to wind up its affairs and get the bankruptcy court to approve a plan of reorganization that will pay out creditors, lawyers and other advisers before closing the case. Read more. (Subscription required.)
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Lenders and hundreds of investors yesterday agreed to pay $231 million to end their decade-long legal fight over a clerical error in a $1.5 billion loan to General Motors that was administered by JPMorgan Chase & Co., Reuters reported. The settlement payment will benefit the unsecured creditors of General Motors’ 2009 bankruptcy, as well as the U.S. and Canadian governments, which helped finance GM’s chapter 11 case. The unsecured creditors, who collected pennies on the dollar from GM’s bankruptcy, have been trying for years to recoup some of the $1.5 billion that was paid to GM’s secured lenders. The $1.5 billion loan was syndicated to hundreds of investors who were defendants in the lawsuit. The individual settlement contributions by JPMorgan, a law firm that handled the paperwork and the investors in the loan were not disclosed in court documents. The dispute stemmed from the unintentional release of a lien on GM equipment due to a paperwork error. At the end of 2008, the automaker was preparing to pay off a $300 million financing. The law firm handling the paperwork accidentally included a lien that secured the $1.5 billion loan in the list of security interests it terminated after the $300 million was repaid.
