As part of an ambitious plan to delay debt maturities and stay in business for another couple of years, Residential Capital (ResCap), the troubled real estate unit of GMAC, has offered to redeem $14 billion in bonds for as little as 77 cents on the dollar. The offer, announced May 2, expires June 3.

"Basically it's Look, you either do this and we stave off defaulting on our debt for another year, or we can default now. It's up to you guys,'" said one investor, whose firm has CDO positions in ResCap. "If you want to drag your feet and kick and scream, it's OK, but at the end of the day ... this is what you need to do.'"

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