Ally Mortgage Files For Bankruptcy

Ally Financial Inc. has been struggling to keep its mortgage unit afloat for a while now.  After receiving a large government bailout just a few years ago, time is running out for repayment. As Ally Mortgage unit’s finances continue to dwindle, the company is seeking Chapter 11 bankruptcy in order to restructure and regain a sense of control.

Regrouping

Ally Financial Inc. is a multifaceted company that offers services from banking tools, investments, auto loans and mortgages. After much turmoil in the mortgage unit and pressure from the government for repayment, the company decided to file for bankruptcy in order to sever itself litigation issues and reorganize debts. Ally has already repaid the government $5.5 billion, but still owes another $12 billion.

In order to facilitate debt repayment, the company plans to split the troubled mortgage subsidiary, ResCap, from its remaining operations. Ally is exploring a possible sale of its international operations such as auto loan, insurance and banking operations for Canada, Mexico, Europe and South America.  The idea of a public stock offering is also being tossed around as a potential avenue for boosting revenue that can generate funds for repaying the government bailout loan.