BAHAH!!!! AP Delta Financial to File for Bankruptcy Thursday December 6, 11:30 am ET Delta Financial Plans to File for Bankruptcy After Failing to Package Loans for Sale
WOODBURY, N.Y. (AP) -- Mortgage lender Delta Financial Corp. said Thursday it plans to file for bankruptcy protection after failing to package and sell $500 million in mortgages, which will preclude a planned financing deal. ADVERTISEMENT
In mid-November, the company announced a pending deal in which an affiliate of shareholder Angelo, Gordon & Co. would buy a new series of three-year, 10 percent senior secured notes from Delta and would also receive 40 million newly issued shares of common stock, effectively increasing its stake to 61 percent from 31 percent.
But the company has been unable to complete the sale of the mortgages and so does not expect to complete the Angelo, Gordon deal. Consequently, on Dec. 5, Delta received notices from its warehouse lenders saying it has defaulted on its loans.
Now subject to hefty payment obligations and cross-default claims from other creditors, Delta said it will no longer be able to operate as a going concern.
Delta will suspend taking new mortgage loan applications until further notice. Delta also said it is currently in discussion with entities that are potentially interested in acquiring its assets and operations.
Delta, primarily a subprime mortgage lender, is the latest casualty in a string of lender bankruptcies, a result of rising mortgage defaults and a crumbling market for mortgage-backed securities.
Delta shares plunged $1.39, or 82 percent, to 31 cents in morning trading.
Office - Think about how the AIG shorts have gotten absolutely crushed since the announcement. Some of them may have been wiped out. Like the imaginary childhood monsters under the bed -- sometimes the financial boogins are way over exaggerated.