Bankruptcy News

We've summarized the latest docket activity and news for publicly traded companies currently operating under U.S. Bankruptcy Court protection.

Bankruptcy/Chapter 11 / Bonds

Residential Capital Plan Confirmed

The U.S. Bankruptcy Court confirmed the Revised Second Amended Joint Chapter 11 Plan filed by Residential Capital and its official committee of unsecured creditors. According to the documents filed with the Court, “The Plan is the culmination of extensive, good faith negotiations guided by the Honorable James M. Peck, as mediator (the ‘Mediator’), among the Debtors, the Creditors’ Committee, Ally, and the Consenting Claimants. The terms of the Plan are premised upon Ally’s agreement to provide, in addition to the substantial financial and operational support already provided to the Estates throughout the Chapter 11 Cases, an additional contribution of $2.1 billion in plan funding, comprised of (1) $1.95 billion in Cash to be paid on the Effective Date of the Plan and (2) the first $150 million received by Ally for any Directors and Officers or Errors and Omissions claims it pursues against its insurance carriers related to the claims released in connection with the Plan; provided, that Ally guarantees that the Debtors (or the Liquidating Trust) will receive $150 million on account of such insurance claims, which guarantee shall be payable without defense, objection, or setoff on September 30, 2014 (collectively (1) and (2), (the ‘Ally Contribution’), in exchange for the Debtor Release and the Third Party Releases....In addition, the Plan settles a variety of highly complex disputes that have been a source of contention throughout the Chapter 11 Cases and which, if left unresolved, would have led to years of costly litigation and resulted in significant uncertainty and delays in distributions to creditors. Each of the settlements embodied in the Plan are dependent upon all others and, thus, constitute a Global Settlement (the ‘Global Settlement’) of the numerous issues resolved under the Plan. Absent the Ally Contribution, the Global Settlement would not be possible. The Second Amended Plan, among other things, reflects a settlement (the ‘JSN Settlement’) among the Plan Proponents and certain of the Junior Secured Noteholders, the Ad Hoc Group, the Junior Secured Notes Indenture Trustee, and the Junior Secured Notes Collateral Agent (each as defined in the Second Amended Plan). The JSN Settlement has the support of Ally and certain of the Consenting Claimants and resolves the JSN Adversary Proceeding as well as the pending objections to confirmation filed by the Junior Secured Notes Indenture Trustee, the Junior Secured Notes Collateral Agent and the Ad Hoc Group.” Michael A. Carpenter, chief financial officer of Ally Financial, comments, “Confirmation of the ResCap Plan offers broad and permanent releases of substantially all past, present and future mortgage-related claims, which is a key point of progress for Ally in achieving nearly complete closure for mortgage liabilities.” The parties expect the Plan to become effective within the next week. This real estate financer filed for Chapter 11 protection on May 14, 2012, listing $15.7 billion in pre-petition assets.

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Return of Volatility? No, Return of "Normal"

Sizeable market moves can increase the temptation to sell on downdrafts and buy on upswings; however, we strongly advise against attempting to do that. The chances of getting out at the right time and then back in again before the market rebounds are extremely slim. Read More.

Harnessing Activists to Help Find Turnaround Stocks

Activist investors often produce attractive returns for their clients; and you can still use their influence to help your position as a turnaround investor in two ways: Buy a position in a stock with the expectation that an activist will soon follow or buy after an activist takes a stake.


Value Investing


While one of the many dozens of activist funds might find their way to selecting your particular stock, this approach is likely to be frustrating and unrewarding. A better approach is to buy after the activist makes their move. Once an activist takes a stake in a company, how do you evaluate whether it is worthwhile to follow on? Admittedly, this is a bit of an art... Learn how you can harness the power of activist investors to find market-beating turnaround stocks.

Turnaround Letter Stock Pick Named Top Performer of 2017


stock market advicex


What Last Year's Top Stock Pickers Are Buying in 2018


This Forbes write-up follows up on the recent Top Stock Tips report--naming The Turnaround Letter's Crocs recommendation the top performer of 2017: With 90% gains, CROX beat out 100 other investment ideas included in the report; and the stock continues to have value investing appeal, according to Putnam.


George notes, "We see additional upside for the stock in 2018 as management's efforts continue to bear fruit, though the gains will likely be more muted than we saw in 2017."