NEW YORK - Contifinancial Corp., a subprime mortgage lender that struggled for two years with liquidity problems, said late Wednesday that it filed for bankruptcy protection.
Conti, which had previously acknowledged the possibility of bankruptcy, said the Chapter 11 bankruptcy filing was "part of its efforts to reorganize the company's capital structure and preserve value for its creditors."
Last week the company said it had agreed to sell its home equity loan servicing platform and servicing rights to Fairbanks Capital Corp., a Salt Lake City company that services non-performing loans. Conti said it is in negotiations to sell its loan origination arm.
The bankruptcy filing lists Greenwich Capital Markets among Conti's largest secured creditors, with mortgage loans of undetermined value as its collateral. The 20 largest unsecured creditors included: Norwest Bank, as trustee for holders of Conti's $700 million of senior notes; Credit Suisse First Boston, with a $35.9 million claim; Dresnder Bank, with $35.9 million; Bank of Nova Scotia, with $26 million; Bank of New York, with $23.6 million; Credit Lyonnais with $22.8 million; and Bank of America with $19.5 million.
MBIA Inc. issued a statement Thursday saying it does not expect to take any losses as a result of Conti's bankruptcy filing. MBIA said it has a net par exposure of $4.9 billion on securitizations of home equity loans and first-lien residential mortgages originated, issued and serviced by Contimortgage.
- An Excerpt from the Full Text of ContiFinancial Corp.'s Chapter 11 Filing - May 18, 2000, 49-page Adobe Acrobat file (Source: U.S. Bankruptcy Court's Southern District of New York)
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