LAWFUEL – It appears there is little chance for any future survival of American Home Mortgage Investment Corp, according to experts.
Newsday reports that after weeks of speculation followed by a spectacular collapse, American Home Mortgage Investment Corp. is officially bankrupt, a victim of tightening credit markets and the decreasing value of its loan portfolio.
The company filed papers for Chapter 11 protection yesterday morning in U.S. Bankruptcy Court in Delaware.
“It is unfortunate that American Home Mortgage, a company we built into a highly successful business, experienced this sudden reversal of its fortunes due to the unanticipated and rather sudden deteriorations in the secondary and national real estate markets,” founder and chief executive officer Michael Strauss said in a news release.
The release said the company will use bankruptcy to maximize the value of its assets and operation and ensure “an orderly wind down of the company” – a clear indication, analysts said, of American Home’s intention to cease all operations.
Specifically, the company hopes to sell off all of its assets, including its portfolio of loans and mortgage-related securities, at auction. Weeks ago, analysts predicted this, suggesting that lenders and other investors might pick up the loans for pennies on the dollar.
Following the bankruptcy news, the New York Stock Exchange commenced the process of delisting of all of American Home’s common and preferred shares.
The company, which went from unexpectedly delaying a dividend on July 27 to shuttering most operations a week later, intends to take $50 million in financing from financier Wilbur Ross Jr.’s company WL Ross & Co. Llc. Ross has made a fortune in devalued industries like steel, coal and textiles.