The American Lawyer named Gary Lee, global co-chair of Morrison & Foerster's Business Restructuring & Insolvency Group and co-chair of the Finance Department, a 2014 Dealmaker of the Year for his representation of Residential Capital in its chapter 11 filing and restructuring. It was the largest bankruptcy filing of 2012, and the case represents the first time ever that a mortgage servicer was able to successfully continue servicing and originating mortgages in bankruptcy and be sold as a going concern.
Working with only two assets, the company's loan portfolio and its rights to service millions of residential mortgage loans – the latter of which was unsalable, Lee helped to devise a strategy described by Tammy Hamzehpour, chief business officer of the ResCap estate, as "pretty novel." He convinced a core group of the RMBS plaintiffs to allow the contracts to be bifurcated, severing the servicing rights from the obligations, in exchange for a prearranged claim, allowing ResCap to ultimately sell the servicing rights at a competitive auction for $4.5 billion. The arrangement prompted other creditors to enter mediation.
Prevailing over regulatory pressures and additional complex negotiations that spanned 18 months, 25 written opinions, and innumerable orders to resolve disputes, the reorganization plan was approved by Judge Glenn on December 11, who praised Lee and called the matter "the most complex he had ever adjudicated." "The global settlement that is the cornerstone of the plan of liquidation reflected creative solutions to seemingly intractable problems," Glenn said.