Business

ResCap reorg could leave John Paulson out in the cold

After several contentious months in Chapter 11 reorganization, bankrupt mortgage lender ResCap is close to a deal with key creditors, The Post has learned — news that is likely a plus for taxpayers but bad news for hedge fund billionaire John Paulson.

The two sides grew close to a deal during mediation sessions this week after Ally, the government-owned parent of ResCap, agreed to fork over much more than the $750 million it had on the table, sources said.

Filing a reorganization plan by the May 7 deadline could make it easier for Ally to step away from the lender’s liabilities and raise cash — either through the sale of assets or by taking its remaining auto-lending and online-bank business public — to pay back Uncle Sam.

Ally still owes taxpayers more than $11 billion of its $17.2 billion crisis-era bailout, the second-largest outstanding loan balance under the TARP rescue program.

ResCap’s near deal with key creditors appears to be bad news for Paulson & Co., the hedge fund run by the investor, sources added.

Paulson, sources said, bought ResCap holding company bonds in hopes of netting a nice payout — but could be left getting little or no payout.

Ally seems to believe it does not need to settle with Paulson’s group to win bankruptcy court approval for ResCap’s reorganization plan, sources said.

ResCap and Ally’s talks have been mostly with a group of creditors that includes monoline insurers and mortgage-backed securities.

Ally has told the groups they need to decide how to share proceeds in the reorganization. Then, they can finish the talks.

While the two sides are close, it is always possible they will fail to finalize a deal, sources cautioned.

Missing the May 7 deadline could throw the bankruptcy into a free-for-all that could last years.

Ally will then have a very hard time paying back Uncle Sam.

Last Friday, ResCap asked the court to let it have until July 10 to file its plan — but Judge Martin Glenn, when extending the reorganization in early March, said, “ResCap would have a hard time convincing me to extend exclusivity again.”

ResCap filed for bankruptcy in March 2012, and while it has successfully sold off most of its assets, it has not succeeded in convincing its creditors to agree to reach a settlement.

Meanwhile, struggling New York bond insurer MBIA is running out of cash and needs the funds from a settlement.

Next month, according to several sources, state regulators will likely seize MBIA Insurance — which guaranteed billions in mortgage-backed securities peddled to investors before the housing bubble burst — if it cannot make a roughly $100 million payment to customers.

State regulators will likely seize MBIA’s unit that insures mortgage securities if MBIA cannot come up with the funds.

Ally, ResCap and MBIA declined comment.

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The terms of the Ally-Rescap creditor deal are being set and it appears they will roll right over billionaire John Paulson, The Post has learned.

The terms of the Ally-Rescap creditor deal are being set and it appears they will roll right over billionaire John Paulson, The Post has learned. (Dan Brinzac)