ResCap rejects Berkshire asset bids Residential Capital has called on the judge hearing its bankruptcy to ignore an offer from Berkshire Hathaway, the investment company run by billionaire Warren Buffett, to be the "stalking horse" bidder for assets to be sold in its bankruptcy, according to court papers. ResCap is the mortgage unit of Ally Financial, which is majority-owned by the US government, as part of its rescue of General Motors during the financial crisis. Its mortgage servicing business and loan portfolio are set to be auctioned off as part of the bankruptcy process. A stalking horse bid is designed to test the market for an asset ahead of a formal auction. The bidder sets a floor price, which it will pay for the assets if there is no higher bid at the auction and is also able to agree terms and conditions of the sale in advance. Earlier this week Berkshire had sought to replace Ally, which was known as GMAC, the financing arm of GM until its bailout, as the stalking horse bidder for ResCap's loan portfolio. Berkshire also sought to displace Nationstar, a mortgage company backed by Fortress Investment Group, as the stalking horse bidder for the mortgage business. The judge in the bankruptcy case, filed last month, is expected to set the terms for the auction at a hearing on Monday. Berkshire offered to beat Ally's bid for the loan portfolio by $50m and to match Nationstar's bid for the servicing business with a lower break-up fee and expense reimbursement. In Friday's filing, ResCap argued that Berkshire had been approached repeatedly to participate in a competitive bidding process to become the stalking horse before ResCap filed for bankruptcy but "simply chose not to participate." Samuel Greene, co-head of Centerview Partners, the investment bank representing ResCap in the bankruptcy, wrote in the filing that Berkshire and other potential bidders would benefit from the "extensive [due diligence] work" completed by Ally and Nationstar before they submitted their stalking horse bids. Berkshire would still be able to participate in the auction process even if it is not the stalking horse bidder. Berkshire's attempt to displace Ally and Nationstar came as the latest twist in a battle between Ally, which was the financing arm of GM and went by the name GMAC before the $17.1bn government bailout, and Mr Buffett's company. Last week Berkshire, which is one of ResCap's largest creditors, had called for a probe into pre-bankruptcy agreements between Ally and ResCap, the effect of which it said "was to transfer a substantial share of ResCap's operating assets to [Ally]." ResCap also on Friday said the judge should not lengthen the due diligence period before bids must be submitted for the asset auctions. Some interested parties had called for up to six months. ResCap rejected a separate bid from Lone Star, another investment company, to become a stalking horse bidder. Berkshire did not respond to requests for comment.