Why does New Century need to file for relief under chapter 11?
Given the significant challenges facing our industry and New Century specifically, we are convinced this is our best course of action. We intend to use the bankruptcy process to protect New Century’s assets while we restructure our operations and sell core elements of our business on favorable terms. As part of the chapter 11 process, we expect that our remaining assets will also be sold in a transaction or a series of transactions.
What exactly is a chapter 11 filing?
Chapter 11 is a part of the U.S. Bankruptcy Code that allows companies to restructure, or in some cases eliminate debts and other liabilities, while continuing to operate. It is not uncommon for companies to file under chapter 11. Some well-known industry leaders who have benefited from chapter 11 are Continental Airlines, United Airlines, and Macy’s. Chapter 11 also facilitated sales of businesses as going concerns. Last month, Resmae sold its loan origination platform through the chapter 11 process.
How long do you expect to remain in chapter 11?
There is no definitive time frame for the chapter 11 process. Although it is our goal to complete this process as quickly and successfully as possible, we cannot be sure how long the process will take.
Does New Century have enough cash to stay in business?
In conjunction with the filing, The CIT Group and Greenwich Capital Financial Products, Inc. have agreed to provide New Century up to $150 million in debtor-in-possession (DIP) financing, subject to court approval. Upon Bankruptcy Court approval, these funds will ensure that we have sufficient working capital to pay our expenses and serve customers during this transitional period.
What happens to any commissions and guarantees that are owed to brokers?
Earned commissions will be paid. Guarantees will not be paid.
How is New Century assisting its brokers?
In the past three weeks we have asked our brokers to place their loans, including those currently in our pipeline, with other lenders. We also notified all closing agents to cancel all closings and to return any funds and original documents to the party or parties who submitted them. There are essentially no loans in our pipeline today.
Is there any chance that New Century will emerge from bankruptcy and continue to operate? If so, when can brokers expect to start referring loans back to New Century?
The bankruptcy process is the best means available to stabilize our situation so that the Company’s assets and operations can be sold through an orderly process. There is presently no emergence plan in place for the remaining corporate entity.
What effect does the loan servicing platform sale have on brokers?
Customers that have existing loans funded through New Century Mortgage Corporation will not be affected and their loans will continue to be serviced.
What will happen if New Century sells its origination platform?
We intend to seek buyers for our core assets, including our origination platform, and we would expect that our brokers would have an opportunity to continue to work with the Associates with whom they are acquainted at New Century, albeit with a different employer.
How can I find out more information? Whom can I contact if I have questions?
Any questions or request for assistance should be directed to Mysti Beach-Cope, VP, Broker Services, at (949) 517-0011 or you can visit the new “Restructuring” section of our website at www.ncenrestructuring.com.
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