The Santa Fe, New Mexico-based mortgage lender also announced the expiration of the company’s override agreement, and subsequent entry into forbearance agreements with its counterparties until March 31.
That should give the company time to negotiate and implement a restructuring plan, for which it hired Kirkland and Ellis LLP.
“The Company continues to evaluate various strategic alternatives to restructure its remaining financing agreements, the satisfaction of the deferred payment amounts, obligations to noteholders and other obligations,” it said in a release.
“These transactions may include a consensual restructuring, reorganization or recapitalization of the Company and may also include the filing of a petition for relief under Chapter 11 of the United States Bankruptcy Code.”
Thornburg Mortgage specialized in jumbo and super jumbo adjustable-rate mortgages to the most creditworthy customers, but also invested in similar mortgage-backed securities that plummeted in value as the crisis took hold and other investors quickly dumped their positions.
The event led to a series of margin calls that sunk the once profitable lender, forcing it to severely dilute its shares to repay creditors.
Thornburg was de-listed from the NYSE last December, and now trades at a meager two cents on the pink sheets.
It’s unclear if the company still provides mortgage financing, as they cut staff back in October and likely don’t have the capacity or capital for such endeavors.