ny-
1044822
1
MORRISON & FOERSTER LLP
1290 Avenue of the Americas
New York, New York 10104
Telephone:
(212) 468
-
8000
Facsimile:
(212) 468
-
7900
Larren M. Nashelsky
Gary S. LeeTodd M. Goren
MORRISON & FOERSTER LLP
2000 Pennsylvania Avenue, NW, Suite 6000
Washington, DC 20006
-1888
Telephone:
(202)
887-
1500
Facsimile:
(202)
887-
0763
Alexandra Steinberg Barrage
Proposed Counsel for
the Debtors and
Debtors in Possession
UNITED STATES BANKRUPTCY COURTSOUTHERN DISTRICT OF NEW YORK
In re:
RESIDENTIAL CAPITAL, LLC,
et
al.,Debtors.
)))))))
Case No. 12
-
12020 (MG)
Chapter 11
Joint
ly Administered
SUPPLEMENTAL DECLARATION OF SAMUEL M. GREENEIN FURTHER SUPPORT OF THE PROPOSED SALE OF DEBTORS’ ASSETS
I, Samuel M. Greene, make this Supplemental Declaration under 28
U.S.C. §
1746 and state:
1.
I am a Partner and co-head of the restructuring group of
Centerview Partners LLC (“
Centerview
”), investment banker to Residential Capital LLC(“
ResCap
”)
1
and the other above-captioned debtors and debtors in possession
1
Capitalized terms used herein and not defined shall have the meanings ascribed to them in the
Debtors’
Motion Pursuant to 11 U.S.C. §§ 105, 363(b), (f), and (m), 365 and 1123, and Fed R. Bankr. P. 2002, 6005,
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(c
ollectively the “
Debtors
”). I submit this Supplemental Declaration in further supportof the proposed sales (the “
Sales
”) which may be effectuated in connection with aChapter 11 plan of reorganization or sale under section 363 of the Bankruptcy Code of (
i)
certain
of the Debtors’ assets (the “Nationstar Purchased Assets”) to NationstarMortgage LLC and its affiliates (collectively, “
Nationstar
”)
2
pursuant to an assetpurchase agreement dated May 13, 2012 (the “Nationstar APA”), all as more fully
described
in the Motion and (ii) certain of the Debtors’ whole loans, trading securitiesand certain other financial assets (collectively, the “AFI Purchased Assets,” togetherwith the Nationstar Purchased Assets, the “Purchased Assets”) to BMMZ HoldingsLLC, a wholly owned indirect subsidiary of Ally Financial Inc., the parent of theDebtors (“
AFI
”),
3
pursuant to an asset purchase agreement dated May 13, 2012 (the“AFI APA,” together with the Nationstar APA, the “
APAs
”), all as more fully describedin the Motion.2.
Except as otherwise indicated, all statements in this SupplementalDeclaration are based upon my review of relevant documents, my discussions with theDebtors and their professionals, and my personal knowledge and experience. If I were
called upon to testi
fy, I could and would testify to each of the facts set forth below.
and 6006 for Orders (A)(I) Authorizing and Approving Sale Procedures Including Break-Up Fee andExpense Reimbursement; (II) Scheduling Bid Deadline and Sale Hearing; (III) Approving Form andManner of Notice Thereof; and (IV) Granting Related Relief and (B)(I) Authorizing the Sale of CertainAssets Free and Clear of Liens, Claims, Encumbrances, and Other Interests; (II) Authorizing andApproving Asset Purchase Agreements Thereto; (III) Approving the Assumption and Assignment of Executory Contracts and Unexpired Leases Related Thereto; and (IV) Granting Related Relief
(the
“
Motion
”) or the Whitlinger Affidavit, as defined in the Motion.
2
As used in this Declaration and solely for purposes thereof, Nationstar includes Fortress Investment
Group LLC and its affiliates.
3
For purposes of the Declaration, AFI will be treated as the purchaser of the AFI Purchased Assets.
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WHOLE LOAN PORTFOLIO SALE PROCESS
3.
As detailed in my previous declaration, the Debtors, with theassistance of Centerview, ran a prepetition marketing process for the Purchased Assets
that resulted in three bids for various assets of the Debtors. Of these three proposals, one
bidder elected not to bid on the Whole Loan Portfolio, Nationstar bid $1.4 billion on theWhole Loan Portfolio in conjunction with its bid for the Servicing Platform, and thethird bidder offered significantly below $1.4 billion. In addition, Nationstar proposedincreasing its bid on the Whole Loan Portfolio to $1.6 billion if AFI provided “stretch”financing on terms that were not available in the public debt capital markets. AFI
declined to provide such financing.
4.
After Nationstar was selected as the exclusive bidder for both theServicing Assets and the Whole Loan Portfolio (and with Nationstar’s consent), theDebtors and AFI discussed the possibility of AFI bidding for the Whole Loan Portfolioand becoming the stalking horse bidder for these assets. After a lengthy period of negotiation, AFI eventually agreed to purchase the Whole Loan Assets for $200 millionmore than any other bidder (if consummated through a Chapter 11 plan) and serve as astalking horse without a breakup fee or expense reimbursement. During the negotiationwith AFI, the Debtors and Centerview insisted that that the Debtors preserve the right tosell the Whole Loan Portfolio for $1.4 billion pursuant to a 363 process if a Chapter 11plan was not able to be consummated. The Debtors’ negotiated with AFI on an arm’slength basis that resulted in a more favorable APA then was achievable with any other
bidder in the process.
5.
The Debtors’ decision to execute the AFI APA has threesignificant benefits to the estate: (i) the AFI Purchased Assets are de-linked from the
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ResCap's Rejection of Berkshire Hathaway Stalking Horse Proposal
Residential Capital's rejection of proposals by Berkshire Hathaway to become the stalking horse bidder for two sales of the bankrupt mortgage lender's assets.
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