Fieldstone Mortgage Company, which halted most of its lending operations two weeks ago, filed for Chapter 11 bankruptcy protection at a U.S. Bankruptcy Court in Baltimore on Friday.
According to documents filed with the U.S. Bankruptcy Court for the District of Maryland, the Columbia-based mortgage lender cited a sharp rise in the number of delinquent mortgage payments coupled with harsh conditions associated to the ongoing credit downturn.
The company said it had more than $100 million in liabilities and between $1 million to $100 million in assets, and would be forced to shut down unless it’s allowed to borrow $3.8 million from parent C-BASS.
“Without immediate access to a post-petition financing facility, the debtor will be unable to operate as a going concern,” said Fieldstone.
In February, Fieldstone’s parent, Fieldstone Investment Corp., agreed to be acquired by Credit-Based Asset Services and Securitization LLC (C-BASS) in a deal valued at $188 million.
But the July acquisition severely limited lending operations for Fieldstone, forcing the company to continue to operate on a smaller scale for several months.
According to recent sources, Fieldstone was still running its retail operations out of Frisco, Texas, but had halted its subprime wholesale operations.
The subprime lender’s bankruptcy filing listed a number of large creditors, including Morgan Stanley, who has a $38.5 million claim, HSBC’s Household International, which claims $23.3 million, along with $15.3 million claimed by Bear Stearns and $10.4 million claimed by Countrywide.
Fieldstone Mortgage Company, which was founded in 1995, originated $5.5 billion in mortgages in 2006, and employed 1,000 workers as of the end of last year, though most had been laid off during the year as the mortgage crisis forced the lender to reduce its offerings and staff.