Delta Financial said Thursday that it has stopped accepting new loan applications and will file for bankruptcy protection.
The Woodbury, Connecticut-based mortgage lender said it was unable to complete a previously announced deal for much needed financing from Manhattan-based Angelo, Gordon & Co.
“The company has been unable to complete such a securitization transaction upon satisfactory terms. In light of the foregoing, the company does not expect to be able to consummate the…transaction with Angelo, Gordon. Furthermore, the company does not believe that it will be able to continue as a going concern,” Delta said in an announcement.
Delta intends to file for bankruptcy protection shortly and will “continue to operate its business as a ‘debtor in possession” under the bankruptcy code.
About a month ago, Delta Financial laid off nearly half of its remaining 1,000 employees on the same day it announced a third-quarter loss of $39.6 million.
It is believed that more employees have been let go today as a result of the news, though the company would not comment on the situation.
In November, the embattled lender also said it would close the Chicago and Arizona offices of its retail subsidiary, Fidelity Mortgage.
Shares of Delta Financial nosedived in afternoon trading Thursday, falling $1.50, or 88.24%, to a mere 20 cents.
Based on that trading price, Delta Financial now has a market cap of only $4.72 million.