Ally's Residential Capital LLC (ResCap) can still be sued by the Federal Housing Finance Agency (FHFA). This is in spite of the bankruptcy status attached to Ally's ResCap mortgage unit, according to presiding Judge Denise Cote.

Firms usually take on the bankruptcy status in order not to be sued by their creditors. It is believed that a litigation can affect a firm's restructuring process and make it all the more harder for a firm to recoup from its losses and pay off the creditors. The impending lawsuits against Ally sprung from allegations of Ally making false and misleading statements in documents associated with the mortgage-backed USD6 billion worth of securities purchased by Freddie Mac between September 2005 to May 2007. 

Judge Denise Cote, the judge presiding over the lawsuits against ResCap said the claims can be carried out because they would not have an "immediate adverse economic consequence" for the ResCap's estate.

ResCap's lawyers have yet to respond to the judge's claims.