Fleet Approves Jayhawk's Chapter 11 Plan

Jayhawk Acceptance Corp. said it agreed on a reorganization plan with Fleet Financial Group and filed the plan in bankruptcy court.

Under terms of the plan, Jayhawk will continue to operate its business and pay its creditors in full, paying the bankruptcy court in monthly installments, with the final payments due September 1998.

The Dallas-based auto finance company filed for Chapter 11 bankruptcy protection Feb. 7 after posting a $15.5 million loss in the fourth quarter related to bad car loans.

Jayhawk buys loans from car dealers made to borrowers with bad credit, paying the dealer half the face value of the note. The company then collects the remainder of the loan, paying dealers a small percentage of any additional collections.

Jayhawk's reorganization plan, which was submitted to U.S. Bankruptcy Judge Steven Felsenthal, was approved by Fleet, Jayhawk's primary creditor. The reorganization plan requires bankruptcy court approval.

In late March, Jayhawk's bankruptcy attorney, Kelly Walsh, said that if an organization plan was filed by mid-April, the bankruptcy court could confirm the plan by mid-June, clearing the way for Jayhawk to emerge from bankruptcy.

Jayhawk's bankruptcy is another example of the financial problems that many subprime lenders have experienced in the past year.

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