DENVER-Dow Jones is reporting that Centrix Financial LLC, now in the midst of Chapter 11 bankruptcy proceedings here will go forward with the sale of its auto-loan servicing business to Falcon Investment Advisers, Everest Reinsurance Holdings Inc. and Robert Sutton, Centrix's founder and CEO, for about $30 million.
U.S. Bankruptcy Court Judge Elizabeth Brown heard from concerned CU parties about the proposed sale of remaining Centrix assets because the deal would require them to release claims that Sutton benefited unfairly at their expense. Centrix still retains the servicing of some 130,000 loans worth an estimated $1.9 billion, two-thirds of which were funded by 200 credit unions throughout the country. Falcon and Everest offered to remove the promised releases to Sutton, but Sutton said the deal can't be amended without his consent, said Dow Jones.
Centrix filed for Chapter 11 bankruptcy reorganization in September 2006 and has reduced its work force to 400 from several thousand. One week shy of that filing, the company announced its acquisition by Falcon Investment Advisors and Everest Reinsurance Holdings. If the sale is approved by the bankruptcy court, Sutton would own 5% percent, Falcon would own 70% and Everest 25%. If the deal goes through, a new company will be formed to service the portfolio.
A recent Denver Post story quoted attorney Michael Richman, who represents Centrix's unsecured creditors referring to the company as a "melting ice cube. At the end of the day, the whole thing could melt down," said Richman.
