Ownit Mortgage Solutions Inc. has filed for Chapter 11 bankruptcy protection, listing $170 million of unsecured claims, including $93 million of repurchase requests from Merrill Lynch & Co. Inc., its largest creditor and a 20% owner.
The Agoura Hills, Calif., subprime lender filed a 90-page petition Thursday in U.S. Bankruptcy Court for the Central District of California, in Van Nuys. It listed $166.4 million of repurchase requests, mostly from Wall Street investment banks, as well as trade and employee claims.
Ownit listed Terwin Advisors LLC, a unit of Winter Group in New York, as its second-largest creditor, with $19 million of claims.
The 20 largest unsecured creditors also included Credit Suisse Securities USA LLC, formerly Credit Suisse First Boston LLC, with $12.7 million of claims; JPMorgan Chase & Co., $11.3 million; and Countrywide Home Loans Inc. in Calabasas, Calif., $11.2 million.
Ownit shocked the industry Dec. 5 by suddenly shutting its offices. The 17th-largest subprime lender was hit with a margin call Dec. 1 by Merrill Lynch and had expected an additional capital infusion from Merrill to continue operating. The capital never materialized, and Ownit was forced to close its 15 offices and lay off 800 employees.
It had been one of the fastest-growing subprime lenders in the industry and expected to originate at least $10 billion of mortgages this year, more than 12 times its 2003 production.
In an interview Tuesday, Bill Dallas, the company's chief executive, said that IndyMac Bancorp Inc. had sued for payment of an unsecured claim of about $1 million, forcing Ownit to file for bankruptcy protection.
IndyMac, in Pasadena, Calif., said through a spokesman that it had sued last month for a lien on Ownit's assets after the lender did not repurchase loans pursuant to early-payment default provisions.
Mr. Dallas said that filing for protection under Chapter 11 of the Bankruptcy Code lets a company put employee claims before all others. He said he expects the company to get a 2006 tax refund that will allow the payment of severance.
In its filing, Ownit said it has assets of $1 million to $10 million and 1,000 to 5,000 creditors.
Other unsecured creditors include C-Bass LLC with $8.6 million of claims; Residential Capital LLC, a unit of General Motors Acceptance Corp. LLC, $5 million; and Nomura Credit and Capital Inc., a unit of Nomura Holdings Inc. in Tokyo, $3.9 million.
