Ally said to receive Buffett offer to buy ResCap before bankruptcy
NEW YORK (Bloomberg) -- Billionaire Warren Buffett sought to buy Residential Capital from Ally Financial Inc. before the government-owned company put the home lender in bankruptcy, according to three people familiar with the matter.
Buffett assigned former hedge-fund manager Ted Weschler to negotiate an offer with Ally, said the people, who requested anonymity because the talks were private. Buffett's Berkshire Hathaway Inc. would have paid almost nothing upfront for the assets, while taking on potential liabilities such as mounting litigation costs and other claims, the people said.
Buffett sought to avoid a ResCap bankruptcy filing because Berkshire had unsecured debt in the mortgage unit, according to the people.
Ally, the former GMAC finance unit of General Motors, turned down the Weschler proposal after deciding that a bankruptcy filing and sale better protected the company from future liabilities, the people said.
ResCap's board voted to declare bankruptcy and arrange a sale to Fortress Investment Group LLC and Nationstar Mortgage Holdings Inc. for about $2.3 billion, ResCap CEO Thomas Marano said in an interview this week.
Fortress and Nationstar won't take on the liabilities that Berkshire had proposed assuming, according to the people.
"We are confident in the bankruptcy court-supervised bidding process, which is designed to ensure that the ResCap estate receives the best possible combination of price and terms for its assets in a court-approved transaction," said Susan Fitzpatrick, a ResCap spokeswoman, in an e-mailed statement.
Buffett, 81, didn't return a message left with an assistant at Omaha, Neb.-based Berkshire seeking comment. Gina Proia, a spokeswoman for Ally, and the U.S. Treasury Department's Matt Anderson declined to comment.Contact Automotive News