Ally Financial Heading Towards Bankruptcy
Ally Financial has been working to keep its mortgage unit out of bankruptcy for the past few months. Formerly GMAC, Ally bank offers an array of products from retirement accounts, to mortgages and car loans. Having suffered financially in its mortgage unit, CEO Michael Carpenter may not be able to hold off the filing much longer.
Debts Are Due
Ally owes a massive debt payment on May 14, a payment that the company does not have enough cash to cover at the moment. Despite Carpenter’s efforts towards in-house restructuring, Ally has appeared to have exhausted all options for resolving their debts. It is expected that the company will place its mortgage unit into bankruptcy protection in the next three weeks.
As recent talks have noted the possibility for Ally to pursue public offerings worth around $30 million, the threat of bankruptcy may have stopped such action in its tracks. Further, the US owns a 74% stake in the company after providing a hefty bailout a few years ago. The filing could tarnish Obama’s efforts for helping mortgage giants while also leaving taxpayers with a hefty responsibility.
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