Foreclosure Related Crisis Compels Lender to File for Bankruptcy
May 22nd, 2009
The foreclosure related to crisis is sparing none – it has now compelled a jumbo lender to file for bankruptcy. Thornburg has filed for bankruptcy.
It said that it would seek Chapter 11 protection and shut down business operations. Thronburg is one of the top ranking casualties of the ongoing foreclosure crisis. The outstanding assets of Thornburg would be sold or liquidated to make payments to the bondholders and the creditors. After that the firm would shut down according to a statement issued from Santa Fe by Thornburg – a company based in New Mexico.
Thronburg used to give out loans of over $417,000 that were made to finance expensive houses. From August 2007 its credit flow began to dry up as foreclosures across USA began to surge and swell. The investors eyed with growing concern the assets that backed the residential loans Meanwhile Thornburg had got the backing of MatlinPatterson Global Advisers. The latter became the biggest shareholder of Thornburg. Earlier this year MatlinePatterson returning its stake gave out warnings around the middle of March that Thornburg was heading for bankruptcy.
The creditors of Thornburg included big names lime CitiGroup, Credit Suisse. JPMorgan Chase, Royal Bank of Scotland as well as UBS Ag. They are chalking out plans to seize and then sell of their securities and thereby reduce the amount that Thornburg owes to them. The company also has plans to hand over the mortgage servicing rights it holds to these various creditors, enabling them to raise some dues.
Thronburg has plans to sell off all its other assets with the help of Houlihan Lokey Howard & Zukin Capital Inc. It will be unable to make interest due on 31st March on senior sub-ordinate notes that would be maturing in 2015. Suzanne O’Leary Lopez of Thornburg said there are nearly 150 persons employed by the company. Larry Goldstone the CEO of Thornburg said, “Our dissolution was created by one issue, the inability to support the equity (margin) requirements for financing our mortgage securities portfolio, given the continued decline in mortgage-backed securities prices.”
Last November’s regulatory filing showed that Thornburg had lost $2.75 billion calculating to $85.71 per share from January to September 2008. September came to a close with mortgage assets worth $24.4 billion (ARM’s). The shares fell from 3.4 cents to 1.6 cents and are likely to touch zero in the event of a bankruptcy.
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May 22nd, 2009 at 1:27 pm
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June 11th, 2009 at 12:21 pm
[...] scourge. Three economic indicators are taken into account to calculate the index – foreclosures, bankruptcy and unemployment. It is being used to measure how much foreclosures have affected over 3,000 [...]