Ally Financial has been reportedly working on plans for a pre-packaged Chapter 11 bankruptcy filing for its troubled Residential Capital (ResCap) unit.
As a response, Barclays Capital analysts examined the potential implications of a ResCap filing for Ally-related, non-mortgage ABS deals.
Barclays specifically looked at the Capital Auto Receivables Asset Trust (CARAT) transactions, Ally Auto Receivables Trust (ALLYA) offerings as well as the Ally Master Owner Trust (AMOT) dealer floorplan securitizations.
According to Barclays, the servicer, sponsors, and depositors for these three trusts' offerings are all independent of, and for the most part not related to, ResCap or GMAC Mortgage Group, which follow a "different lineage on the corporate family tree."
The obvious exception, analysts said, is Ally Financial as the servicer. Ally is the ultimate parent of GMAC Mortgage Group and ResCap, and Ally Bank. The bank is a unit of IB Finance Holding Co., a wholly owned subsidiary of Ally Financial.
This is why, provided only ResCap is placed into bankruptcy, there should be no structural effect on CARAT/ALLYA and AMOT deals, Barclays analysts said. According to them, ResCap has no relationship, deal-related or otherwise, with any CARAT/ALLYA or AMOT transaction party.
Analysts explained that securitizations of all types usually have triggers related to the bankruptcy, insolvency, or receivership of the significant parties in the deal such as the sponsor, the servicer, and/or the issuer/trust itself.
A bankruptcy filing's impact really relies on whether the filed entities form a part of the different triggers and the remedies specified in the underlying deal documents.