Bankruptcy for Countrywide or Liquidation for BofA?

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Bankruptcy for Countrywide or Liquidation for BofA?

Bankruptcy for Countrywide or Liquidation for BofA?

Abigail C. Field

The LATimes reported that Brian Moynihan wouldn’t rule out bankruptcy for Bank of America. Chris Whalen urged the bank to go bankrupt. Now rumors are swirling that BofA will try to dodge all Countrywide’s lawsuit liability by putting Countrywide into bankruptcy, saving BofA in the process.

Whether BofA succeeds in ducking Countrywide’s liabilities depends mostly on one question: will the bankruptcy court apply Delaware law, which prizes form over substance, or law like New York or California’s, which looks at substance over form? That choice of law factor is what got BofA off the hook of Countrywide liability in one case, and left it on the hook in another, as detailed by Isaac Gradman at the Subprime Shakeout.  And if you think about it, the idea is incredibly galling.

[REALITY CHECK]

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One Response to “Bankruptcy for Countrywide or Liquidation for BofA?”

  1. I think Delaware will be the State since MERS, Countrywide incorporated in Delaware, I do not know about Bank of America incorporation home.Countrywide was predators with corruption and greed from Angelo down to his mortgage agents. Top to bottom they won my confidence on sheer expression of my poor situation. Off point here so we get some Jude’s feelings.

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