Accredited Home Lenders (“AHL”), the San Diego-based mortgage lender, filed for bankruptcy in the United States Bankruptcy Court for the District of Delaware on May 1, 2009. According to AHL’s Declaration in Support of Bankruptcy Motions (the “Declaration”), during its 19 years in business, AHL grew to “one of the nation’s premier mortgage banking institutions,” with over 2,500 employees and annual residential loan origination as high as $2 billion.
At the height of the real estate bubble, the majority of AHL’s revenue came from the origination of subprime residential loans. Once the U.S. real estate market began to decline, AHL began experiencing significant borrower defaults, which in turn reduced its liquidity. According to its Declaration, by August of 2007 AHL stopped originating new loans and laid off over half of its employees.
AHL’s Loan Repurchase Claims
According to AHL’s bankruptcy petition, its ten largest unsecured creditors hold “repurchaser claims.” AHL lists these claims as follows:
- HSBC … $91 million
- Citigroup … $33 million
- Goldman Sachs … $21 million
- Morgan Stanley Mortgage Capital … $13 million
- UBS … $9 million
- SG Mortgage … $6 million
- Wells Fargo … $5.7 million
- HSBC … $5.5 million
- Lehman Bros. … $5.6 million
- Merrill Lynch … $5.2 million
AHL classifies each of the above claims as a “disputed” “repurchaser claim.” In October of last year, I discussed a recent decision by the Delaware Bankruptcy Court in American Home Mortgage. (Read my post regarding American Home Mortgage here). The decision in American Home Mortgage addresses the scope of the definition of “repurchase agreement” under the 2005 amendments to the Bankruptcy Code. Given the repurchaser claims above, parties in interest in the AHL bankruptcy may find it worthwhile to review the decision in American Home Mortgage as it addresses issues highly relevant to mortgage-related bankruptcies.
This bankruptcy proceeding is before the Honorable Mary F. Walrath, former Chief Judge of the Delaware Bankruptcy Court.