Ditech Customers Win Protections in Ditech bankruptcy As Ditech Promises To Fight Back
Ditech customers won a major victory in the long and winding saga of Ditech’s bankruptcy. The bankruptcy Trustee granted a request to create a committee to protect consumer interests in the proceedings.
The Trustee’s decision riled Ditech’s attorneys. As a result, they filed a motion objecting to such a committee. They asked the trustee to disband the committee or limit the scope of its involvement in the bankruptcy proceedings.
The drama began when a group of Ditech customers formed a consumer committee drama began last month. They soon filed petitions with the bankruptcy trustee asking for the creation of a committee to represent the interests of Ditech customers.
Among those seeking a seat at the table were Chicago-area victims of a reverse mortgage scam. The loans are being serviced by Ditech subsidiary Reverse Mortgage Solutions.
Lawyer for the victims, J. Samuel Tenenbaum of Northwestern’s Complex Civil Litigation and Investor Protection Center stated that such a committee was necessary to protect the rights of these borrowers.
He told Housingwire:
The Connecticut Fair Housing Center and Atlanta Legal Aid also filed petitions. The groups represent approximately 800 consumer creditors.
The Trustee approved the creation of a five-member consumer committee on May 2nd. However, the ink was barely dry before Ditech filed its objection.
Ditech claimed that the Trustee’s move was “arbitrary and capricious” and would also have a chilling effect on Ditech’s attempts to sell off portions of its business.
Ditech also asked the trustee to limit the scope of the committee.