New Century Attracts No One, Lays Off Another 2,000
Bankrupt subprime mortgage lender New Century Financial Corp. was unable to generate any bids for its mortgage loan origination business, resulting in the closure of the unit and the immediate termination of roughly 2,000 positions.
The deadline for bids on the Irvine-based company’s wholesale and consumer-direct operations passed quietly on Wednesday without a single offer from the potential buyers that had shown any prior interest.
Requests by New Century to extend the deadline were not backed by its creditors committee and the company has stopped efforts to sell the unit.
New Century had been preparing to sell off its assets under Chapter 11 bankruptcy protection since April 2, when the company announced it would immediately fire more than half of its staff – approximately 3,200 workers.
Last week, the company notified approximately 2,000 employees during a conference call that they likewise would be laid off immediately.
About 1,150 of the positions terminated were from the wholesale division and roughly another 575 positions eliminated came from New Century’s retail unit.
The remaining 275 jobs eliminated had been for support employees.
Following the latest round of layoffs, about 750 employees will remain at New Century to help wind down the bankruptcy process, including 250 corporate positions as well as personnel from the loan servicing unit.
On March 2, the real estate investment trust (REIT) indicated that federal prosecutors were looking into its securities trading in and accounting errors in the amounts set aside for loan losses.
New Century also said New York Stock Exchange (NYSE) Regulation is reviewing the trading that took place just before its announcement on February 7 of restatement plans regarding prior losses.
UBS Real Estate Securities Inc., one of the lenders that declared New Century in default in March, has sued the bankrupt subprime lender for allegedly misappropriating more than $3.8 million from mortgage payments made on loans owned by the investment firm.
Mortgage broker Alaska Seaboard Partners LP also filed a lawsuit against the subprime lender to recover $497,632 in proceeds on purchased loans that were not turned over by the bankrupt lender since the closing of the sale in February.
Additionally, a number of angry shareholders have filed suit against New Century with allegations of mismanagement by the company’s directors and officers.
Posted on Tuesday, May 08, 2007 by staff
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