Criimi Mae Inc. and Citicorp Securities Inc. agreed last week to adjourn for four months litigation over $39.7 million of subordinated commercial mortgage bonds that Criimi had pledged as collateral to the Citigroup unit.
Criimi Mae, a real estate investment trust, filed for Chapter 11 bankruptcy protection in October after the value of its commercial mortgage securities plummeted. Criimi was unable to meet margin calls from its lenders, whose appraisals of the securities differed from its own. Several lawsuits ensued.
Under the agreement, which is subject to approval by the bankruptcy court, Citigroup's Salomon Smith Barney will sell some investment-grade commercial mortgage bonds for Criimi. Its Citicorp Real Estate unit will sell $370 million of loans that Criimi originated before filing bankruptcy.
Criimi will use its portion of the proceeds to help fund its reorganization. The REIT previously reached similar agreements with three other major creditors: Merrill Lynch & Co., Deutsche Bank, and Morgan Stanley Dean Witter & Co.