American Home Mortgage files Chapter 11
American Home Mortgage Investment Corp. said Monday it filed for Chapter 11 bankruptcy protection.
According to a statement, the company was responding to the "sudden adverse impact" of the "extraordinary disruptions now occurring in the secondary mortgage and real estate markets."
"Under the protection of Chapter 11, American Home will have the time and opportunity to achieve the best possible value for the creditors of its mortgage based assets and related operations, as well as an orderly wind down of the company," the company says.
In conjunction with the filing, WL Ross & Co. LLC has agreed to provide American Home up to $50 million in debtor-in-possession financing, subject to court approval. This financing would facilitate the Chapter 11 process.
American Home says it's unlikely the value of its assets will be sufficient to pay its creditors and that it's realistic to conclude there will be no shareholder equity value remaining.
American Home ceased taking mortgage applications Aug. 1 and terminated 6,250 of its 7,000 employees Aug. 3. It's maintaining its thrift and servicing businesses.
An active out-of-lender in Tennessee, the company still had 53 loans in process on Aug. 3.
Greg Gonzales, commissioner of The Tennessee Department of Financial Institutions, issued a "cease and desist" order for the company on the same day.
The Melville, N.Y.-based company (NYSE: AHM) anticipates that the New York Stock Exchange will start delisting proceedings.
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