Berkshire Dumps Part of ResCap Debt Days After Seeking Probe
NEW YORK (TheStreet) -- Berkshire Hathaway (BRK-B) has unloaded its holdings of unsecured bonds of Residential Capital, the insolvent mortgage finance unit of Ally Financial, days after seeking an independent investigation of transactions involving Ally and ResCap.
It is unclear whether Berkshire's sales, disclosed in a court filing on Thursday, indicate that the company has changed its position in calling for the investigation. A court document filed by Berkshire June 4 raised questions about "dozens of transactions with Ally and its affiliates involving billions of dollars of asset transfers and intercompany financing." A call and email message to Thomas Walper, attorney at Munger, Tolles & Olsen, were not immediately returned on Friday.
While Berkshire's $500 million unsecured stake represented more than half of the total unsecured debt of ResCap, Berkshire still owns $900 million--or more than 40%--of the total junior secured bonds issued by ResCap, according to court filings by Berkshire.
The unsecured bond sales were first reported by Bloomberg News.ResCap filed for bankruptcy May 14 and proposed to sell the bulk of its assets in two separate transactions. ResCap is the fifth largest mortgage servicer in the U.S., behind Wells Fargo (WFC), JPMorgan Chase (JPM), Bank of America (BAC) and Citigroup (C). The company tapped Nationstar Mortgage (NSM) as the lead bidder for its servicing and origination platform, though Ocwen Financial (OCN), has said it will also bid. -- Written by Dan Freed in New York. Follow this writer on Twitter.
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