The ResCap Liquidating Trust was established in December 2013 under the Second Amended Joint Chapter 11 Plan of Residential Capital, LLC, et al. to liquidate and distribute assets of the debtors in the ResCap bankruptcy case. The Trust maintains a website at www.rescapliquidatingtrust.com, where Unitholders may obtain information concerning the Trust.

ResCap Liquidating Trust’s mission is to maximize returns to Unitholders by vigorously pursuing and resolving the mortgage correspondent litigation and monetizing the Trust’s remaining assets in a timely and efficient manner.

Since its creation, and as of May 8, 2017, the Liquidating Trust has, among other things:

• Resolved the vast majority of Claims;
• Yielded approximately $435 million in settlements to date;
• Distributed $2.23 billion to Unitholders;
• Complied and substantially completed regulatory obligations under the Office of Mortgage Servicing Oversight and the Department of Justice and Attorney General settlement;
• Completed significant mortgage asset sales that yielded over $300 million in sale proceeds;
• Resolved international litigations and dissolved the majority of non-debtor international entities resulting in $46.8 million for the Trust;
• Resolved important litigation matters, including the settlement of the Cap Re class action;
• Managed cost and increased operational efficiencies of the Trust, and
• Reduced debtor entities from 51 to only three open entities.

The current Trust Manager is John J. Ray III. Mr. Ray has extensive experience as a chief restructuring officer and plan administrator in notable bankruptcy cases and situations involving Overseas Shipholding Group Inc., Nortel Networks Inc. and the Enron Corporation.

“Units” are defined as units of beneficial interest issued by the Liquidating Trust, which entitle the holders thereof to receive from the Liquidating Trust a Pro Rata share of Distributable Cash.

There are 100 million units outstanding.

As of May 8, 2017, the Trust has generated litigation settlements of approximately $435 million.  This includes settlements totaling approximately $37 million for the year 2017.

The Trust’s mortgage assets include mortgage loans, servicer advances, interest income, real estate owned, trading securities, net of costs to sell the assets. The Trust continues to pursue strategies to maximize the recoveries of the Mortgage Asset portfolio for the benefit of the Unitholders.

Please refer to the Liquidating Trust website section entitled Litigation Activity for information on legal claims.

Per the Liquidating Trust Agreement, distribution dates are determined by the Trust’s Board and are required to occur no less frequently than semiannually, unless the Board determines that the aggregate amount of cash distribution makes a distribution impracticable. In such a case, the cash will be distributed on a subsequent distribution date.

Please refer to the Liquidating Trust website section entitled “Financial & Tax FAQ.”

Please refer to the Liquidating Trust website section entitled “contact us.”

Section 2.5(b) of the Liquidating Trust Agreement provides that if assets cannot be transferred to the Liquidating Trust by a Debtor entity, or it is impracticable or inadvisable to do so, the Debtor entity will continue to retain those assets until it is notified that the Liquidating Trust may receive the assets. Assets that are held by the Debtor entities under these circumstances are referred to as assets held in bailment.

Are the assets held in bailment consolidated in the Liquidating Trust financial statements?

Yes. The assets held in bailment are consolidated into the Liquidating Trust Financial Statements and are included in the appropriate line items on the Consolidated Statement of Net Assets in Liquidation, as follows: (in 000’s)

The reduction in the assets held in bailment between December 17, 2013 and March 31, 2017 is primarily attributable to the initial distribution and the bank accounts of the Debtors being novated to the Liquidating Trust following the plan effective date.  Additional assets were transferred to the Trust as circumstances warranted.

The Liquidating Trust issued units beginning on December 17, 2013 and made an initial cash distribution to each person to whom units were issued. The initial cash distribution was $17.65 per unit.

Please refer to the Liquidating Trust website’s section entitled Litigation Activity for information on pending lawsuits.

CAP RE of Vermont, LLC (“Cap Re” ) is a capt ive insurance company incorporated and licensed under the laws of the State of Vermont. Cap Re, which is taxed as a C corporation, was owned by GMAC Mortgage, LLC and is now owned by the Liquidating Trust. Cap Re provided reinsurance on mortgage loans originated by GMAC Mortgage LLC and its affiliates and correspondent lenders through entering into reinsurance agreements with various primary mortgage insurers in which the company assumed the risk of loss in excess of various loss percentages. Effective December 31, 2008, Cap Re ceased reinsuring new risk, placing the existing reinsurance agreements into run-off in accordance with their terms.

As of March 31, 2017, the Trust no longer holds mortgage servicing rights.  Previously, the Liquidating Trust held the mortgage servicing rights.

As of December 17, 2013, the Effective Date of the Plan, the Liquidating Trust beneficially owned approximately 80 properties located in 34 states. Effective as of January 15, 2014, the Liquidating Trust contributed those properties (as well as certain interests in mineral rights that have only nominal value) to ResCap Securities Holdings Co., a wholly-owned U.S. corporate subsidiary. In addition, any real property acquired subsequent to that date in connection with foreclosure proceedings has been and will be conveyed directly to ResCap Securities Holdings Co., rather than to the Liquidating Trust. It is contemplated that the corporate subsidiary is a United States real property holding corporation within the meaning of section 897 of the U.S. Internal Revenue Code. Between December 17, 2013 and January 15, 2014, the Trust sold four properties, on which no gain or loss was recognized for income tax purposes.

The Trust is a liquidating trust for federal and, if applicable, state income tax purposes. The Liquidating Trust Agreement provides that the Liquidating Trust was “established for the purpose of liquidating and distributing the Liquidating Trust Assets in accordance with Treasury Regulations Section 301.7701-4(d), with no objective to continue or engage in the conduct of a trade or business, except to the extent reasonably necessary to, and consistent with, its liquidating purpose….” The Trust Agreement further provides that “no part of the Liquidating Trust Assets shall be … used or disposed of in furtherance of any trade or business.” Consistent with these provisions, and in light of the nature of the Liquidating Trust’s assets, the Liquidating Trust does not believe that to date it has recognized any income that would constitute trade or business income (or unrelated business taxable income or income that is effectively connected to the conduct of a trade or business in the United States, though such characterizations may depend in part on each Unitholder’s unique tax position) , and it does not anticipate that it will do so in the future. However, there can be no assurance that this will be the case.

The Liquidating Trust likely would recognize ordinary income equal to the amount of any recoveries received (less any basis that the Liquidating Trust has in the lawsuits), though the character of the income would depend in part on the terms and structure of any sett lement or judgment. The income would pass through to Unitholders, since the Liquidating Trust is a grantor trust for federal income tax purposes. As stated in A.9 above, the Liquidating Trust does not believe that any such proceeds would constitute trade or business income. However, any such income may be treated as United States source income that is subject to withholding for non-U.S. Unitholders at a 30% rate (or lower applicable treaty rate).

The Liquidating Trust owns all of the stock of two US corporations – RFC Foreign Equity Holding Co. and ResCap Securities Holdings Co. – that own the stock of several foreign corporations (which are in the process of liquidating their assets and winding down). The Liquidating Trust does not directly own any stock of any foreign corporation.

Consistent with the Liquidating Trust Agreement and in accordance with applicable law, the Liquidating Trust will provide Unitholders with tax information on an annual basis in connection with the Liquidating Trust’s filing of its annual tax returns. The Liquidating Trust is not required to provide Unitholders with an IRS Form K-1 or Form 1099. The Liquidating Trust provides Beneficiary Information for U.S. Federal and State Income Tax Purposes and a Tax Worksheet for Beneficiaries, via postings on the Trust’s website, which can be found here. The Tax Worksheet for Beneficiaries provides the Trust’s taxable income and expense by category, on both a per Unit and an aggregate basis. The Liquidating Trust does not provide tax advice. Each Unitholder should seek advice from its own tax advisor as to the reporting of its portion of the Trust’s taxable income or loss on its income tax returns.

The Liquidating Trust files income tax returns in those states in which it determines it has a filing obligation. The Liquidating Trust provides Tax Worksheets for Beneficiaries for each of the states in which the Trust files an income tax return via postings on the Trust’s website at: www.rescapliquidatingtrust.com. The Worksheets reflect the income and deductions that the Trust determines should be allocated to each state in which it files an income tax return. The Liquidating Trust does not provide tax advice. Each Unitholder should seek advice from its own tax advisor as to which state income tax returns, if any, it is required to file as a result of owning Units or otherwise and its share of Trust income and deductions, if any, that must be reported on any such state income tax return.

• If your Claim is Allowed and you are entitled to a distribution under the Plan, your distribution may be subject to applicable tax withholding. Accordingly, prior to receiving any distribution, you must submit the appropriate Internal Revenue Service (“IRS”) tax form.
  • If you are a U.S. person, you must provide the Liquidating Trust with your social security number or other taxpayer identification number. Please submit a completed IRS Form W-9 Request for Taxpayer Identification Number and Certification. See Q.15 below regarding where to get a copy of Form W-9.
  • If you are not a U.S. person, instead you must submit a completed IRS Form W-8BEN Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding (or other applicable Internal Revenue Service Form W-8).

In addition, if you are entitled to receive Units, you must also provide broker information. You must designate a broker, bank or other financial institution with which you maintain a securities account to receive your Units on your behalf. You may email the Trust at rescapliquidatingtrust@rescapestate.com to request a form on which to provide your securities account information or access such form on the Trust’s website here. A link to the Securities Account Information Form is provided under the section titled “Forms.”

The completed forms should be returned promptly to the following email or address:

ResCapLiquidatingTrust@ResCapEstate.com or
ResCap Liquidating Trust
P.O. Box 385220
Bloomington, Minnesota 55438

IRS Form W-9 is posted on the Trust’s website here. A link to the Form W-9 is provided under the section titled Distribution Info – Forms.  Copies of the W-9 form can also be found at ww.irs.gov.

A Beneficiary that did not acquire its Units from the Trust in the initial distribution as of December 17, 2013 may have an adjusted tax basis per Unit (and therefore an adjusted tax basis in the underlying Trust assets attributable to such Units) that differs from the adjusted basis of a Unit acquired from the Trust as of December 17, 2013. The basis difference per Unit, in general, should equal the difference Between (i) such Beneficiary’s tax basis in each of its Units at the time it acquired such Units and (ii) $28.02 (the December 17, 2013, tax basis per Unit), increased by the per Unit Trust items of taxable income and gains through the date that the Beneficiary acquired its Units and reduced by the per Unit Trust items of taxable deduction and loss and distributions made through the date that the Beneficiary acquired its Units, in each case as reported by the Trust and available on its website under the heading “financial and tax information.” Because the Trust, in general, does not know the price and date at which such a Beneficiary acquired its Units, it cannot provide this basis information for each Beneficiary.

A basis difference as described above could affect the Beneficiary’s taxable income and loss from holding Trust Units, because the basis difference in Units generally will also result in the Beneficiary having a tax basis in its share of the underlying Trust assets that differs from the basis that the Trust uses in computing its taxable income and loss. A Beneficiary with a basis difference should consult its tax advisor as to whether and how any adjustments should be made as a result of such differing basis to the per Unit Trust items of taxable income and loss as reported by the Trust for the periods that such Beneficiary holds its Units. In general, that may depend, in part, on the determination as to which Trust assets or liabilities the basis differential is attributable and how to calculate the recovery of basis that is allocable to multiple assets of the same class, such as the litigation claims. For example, a Beneficiary whose per Unit adjusted tax basis exceeds that of a Unit acquired from the Trust as of December 17, 2013 may conclude that the excess basis is attributable to the Trust’s litigation claims and that, therefore, its per Unit share of the income recognized from specific litigation recoveries is less than that reported by the Trust.