When Lomas Financial Corp. and its subsidiary, Lomas Mortgage USA, filed for Chapter 11 bankruptcy last October, American Banker reported that "the giant that was Lomas is no more."
Now Lomas Mortgage USA has emerged from Chapter 11, and it is still no more - but now literally.
The creditors committee has renamed it, and the word going around is that the new name was meant as graveyard humor.
It is Nomas Corp. In Spanish, "no mas" means "no more."
Nomas has no more mortgage assets and it is looking to sell its insurance subsidiaries. Sources said sale of the insurance companies could be completed by the end of the month.
According to the company's reorganization plan, filed in May with the Bankruptcy Court in Wilmington, Del., Nomas' primary business will be real estate. A real estate subsidiary owns property in Virginia, Texas, and California.
The court will hold a hearing today to consider Lomas Financial's reorganization plan.
As a result of Lomas Mortgage's emergence from Chapter 11, Lomas Financial and Nomas are now two separate companies. If Lomus Financial's plan is confirmed, it will be involved in managing two assisted-care facilities, in Houston and Denver.
Martin Bienenstock, the lawyer representing Lomas Mortgage's creditors committee, said an oral agreement was reached between the Lomas Mortgage committee and the Lomas Financial creditors committee. The two committees had been squabbling about intercompany matters.
As part of the settlement, Lomas Mortgage will transfer $3 million in cash and additional assets that have a book value of about $13 million to Lomas Financial. Robert Levine, counsel for Lomas Financial and Lomas Mortgage, said Lomas Financial might also receive some real estate from Nomas.
If a written agreement is reached between the two committees, then Lomas' saga could finally come to a close.
Edward Elanjian, a managing director of Cohane Rafferty Securities and adviser to the Lomas Mortgage creditors committee, said the settlement should be the end of the Lomas story because it represents a consensus on "how the carcass will be distributed."
There isn't much left of the carcass in any case.
Lomas Financial was forced to sell its corporate campus in August and has relocated to downtown Dallas. Office equipment and furniture were sold to liquidators. Mr. Levine said the two companies combined currently have fewer than 40 employees.
"It took 100 years to build this company and 18 months to take it down," Mr. Elanjian said.
Lomas was once king of the hill in the mortgage business. But losses from a series of bad real estate deals in Texas led the company to file for bankruptcy in 1989.
After emerging from Chapter 11 in 1992, Lomas focused on servicing - with disastrous results. Interest rates dropped in 1993, and the servicing portfolio bled red ink as a massive refinancing boom took place.
In 1994 the company started selling pieces of its mortgage business.
That year, First Nationwide bought Lomas' Ginnie Mae origination capability and a third of its servicing portfolio. First Nationwide then bought the rest of Lomas' servicing assets after the company filed for bankruptcy last year.