Bankruptcy

New Century Seeks More Time

The subprime lender seeks another 120 days to retain control over its Chapter 11 bankruptcy plan.
Stephen TaubJuly 17, 2007

New Century Financial Corp. wants more time to design its bankruptcy plan.

The once-high-flying subprime mortgage lender has requested an additional 120 days in which it can retain exclusive control as proceeds with its Chapter 11 restructuring, according to the Associated Press.

The company has “a number of tasks to complete” before it’s in a position to develop a plan, and an extension “will simply permit the process to move forward in an orderly fashion,” New Century said in court papers filed Friday with the U.S. Bankrutpcy Court in Wilmington, Del.

A hearing on the proposed extension is scheduled for July 31. If it is granted, New Century would have exclusive right to hammer out a Chapter 11 plan through Nov. 28, according to the AP. It would then have through Jan. 28, 2008 to gain creditors’ support for its plan.

Irvine, Calif.-based New Century sought Chapter 11 protection on April 2 as the sub-prime mortgage-lending industry was spiraling out of control.

Last month, it received approval from the court to sell its loan-origination software for $8 million to Equifirst Corp., an affiliate of Barclays PLC, the wire service noted. Carrington Capital Management purchased New Century’s loan-servicing business for $188 million.

The Securities and Exchange Commission, meanwhile, is also probing New Century’s collapse. Last month, it notified the company it had raised its probe to “formal” status.

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