Warren Buffett's Berkshire Hathaway Inc., one of the largest creditors of government-owned Ally Financial Inc., may wind up playing a central role in the restructuring of its Residential Capital LLC mortgage unit.
Advisers to Ally, ResCap and the Treasury Department see Buffett as someone they may approach about taking an equity stake in ResCap as they explore whether to put it into a prepackaged bankruptcy, said people familiar with the talks. While they haven't approached Buffett, advisers made preliminary calls to buyout firms to gauge their interest in bidding for the unit in a possible bankruptcy, said the people, who declined to be identified because talks are private.
Berkshire is seen as a potential buyer because it holds more than $500 million of bonds in Detroit-based Ally and Minneapolis-based ResCap, and because it previously invested in a commercial-mortgage firm that once was owned by Ally, said people familiar with the talks. The advisers recently have approached firms that last year explored offers for the lender, the people said.
"Buffett or a private equity firm could want a part of this business, especially as the mortgage-origination business picks up over the next few years," said Jody Lurie, a credit analyst at Janney Montgomery Scott. "Any deal would certainly be difficult, as it would have to be structured so investors felt protected. That could be through a bankruptcy of ResCap."
Buffett, 81, chairman and CEO of Omaha-based Berkshire, didn't return a message left with an assistant.
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