The Daily Docket: Ally Puts ResCap Into Bankruptcy

Ally Financial Inc.’s troubled mortgage subsidiary filed for Chapter 11 bankruptcy early Monday, potentially paving the way for Ally to sever itself from substantial litigation that has been a drag on its other operations and prevented it from repaying the remainder of its government bailout. Read The Wall Street Journal here.

Turnaround firms are adapting to a slowdown in traditional corporate restructurings by broadening their capabilities and reach, a trend that’s already sparked one merger and which insiders say could spark more. Read the Daily Bankruptcy Review story here.

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Once one of New York’s biggest law firms, Dewey & LeBoeuf LLP is on the brink of collapse following partner defections, disappointing revenue and a compensation scheme that awarded nearly one-third of the partnership with pay guarantees at the expense of rank-and-file partners, WSJ reports.

Hedge-fund manager Philip Falcone’s LightSquared Inc. venture was preparing Sunday to file for bankruptcy protection after negotiations with lenders to avoid a potential debt default faltered, the Journal reports.

WSJ reports some hedge-fund investors are seeking to profit by snapping up the debts of beleaguered law firm Dewey & LeBoeuf LLP, which may soon shut its doors and owes more than $200 million to banks, bondholders and vendors.

Stephen Reed, Harrisburg’s mayor for 28 years, pushed Pennsylvania’s capital into insolvency as the more than $500 million in bond deals he oversaw to finance community development drained city coffers, reports Bloomberg.

Legislation to ward off a national shortage of a bankruptcy judge passed Congress and has been sent to the White House for President Obama’s signature, reports Legal Times.

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