Bankruptcy Judge Sends C-Bass Exit Plan To Creditors For Vote
04 Mars 2011 - 5:27PM
Dow Jones News
A bankruptcy judge on Friday said creditors can vote on the
Chapter 11 liquidation plan of C-Bass, the once high-flying
marketer of securities backed by subprime mortgages.
In approving the company's disclosure statement, or
plain-language reading of a company's bankruptcy exit proposal,
Judge Allan L. Gropper of U.S. Bankruptcy Court in Manhattan kept
the company on pace to have its plan approved by the court on April
11.
"I think it was a fine, fine job," Gropper told C-Bass lawyer
Peter S. Partee Sr. of Hunton & Williams LLP.
Formally known as Credit-Based Asset Servicing and
Securitization LLC, C-Bass last month filed a proposal with details
about how it will liquidate itself, four months after it filed its
long-awaited bankruptcy.
Senior lenders led by J.P. Morgan Chase & Co. (JPM), owed
nearly $2 billion before C-Bass filed for bankruptcy, will divvy
among them about $196 million. Unsecured creditors and others lower
on the totem pole would at best earn back pennies on the dollar if
C-Bass is able to scrounge up more money that would be placed in a
liquidation trust. But those creditors would have to vote to accept
the plan in order to get any recovery.
The senior lenders allowed C-Bass to use $8.2 million of their
money to fund C-Bass through bankruptcy, in exchange for broad
releases against lawsuits for those lenders.
C-Bass, a joint venture between MGIC Investment Corp. (MTG) and
Radian Group Inc. (RDN) that invested in risky mortgage assets,
filed for bankruptcy protection in November, three years after
initially contemplating a Chapter 11 filing.
As the mortgage crisis spread beyond subprime to encompass the
entire residential mortgage market, C-Bass could no longer meet its
obligations.
After several forbearance agreements, the company filed for
bankruptcy with the consent of its senior lenders.
During its bankruptcy, C-Bass tried to raise money by selling
some of its units, including one that managed collateralized debt
obligations.
(Dow Jones Daily Bankruptcy Review covers news about distressed
companies and those under bankruptcy protection.)
-By Joseph Checkler; Dow Jones Newswires; 212-416-2152;
joseph.checkler@dowjones.com
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