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GMAC Pressed to Bankrupt ResCap Unit

Published August 6, 2009 10:32 AM EDT 1 Min Read

GMAC may cut losses and the need for capital by sending its home mortgage unit, Residential Capital, into bankruptcy, according to CreditSights.

ResCap lost at least $1 billion per quarter since the third period of 2007 and may breach capital covenants in the current quarter, said a report dated Tuesday from CreditSights, the debt-rating firm.

GMAC could keep ResCap’s “remaining good assets” and leave behind $11.4 billion of debt in a bankruptcy, said the report, which asked whether it was “time to put ResCap out of its misery.”

GMAC Chief Financial Officer Robert Hull said Tuesday the company does not want to put ResCap into bankruptcy because GMAC needs the mortgage origination and servicing platform, saying, “You can’t just carve it up and take what you want.”

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