New Century Seeks Chapter 11 Plan Extension

In a court filing Friday, former subprime giant New Century Financial Corp. said it is seeking an extension of a liquidation plan under its Chapter 11 bankruptcy. The Wall Street Journal reported Wednesday that the failed lender is working in concert with a committee of debtors and wants to extend the plan filing deadline until January 28.

From the story:

The company and committee believe, the filing said, that a plan can be documented and filed “well within” the requested 31-day extension of the exclusive period. The company said drafts of the plan and accompanying disclosure statement have already been completed.

As well as seeking to extend its exclusive plan-filing period, the company is seeking to extend by 31 days, to March 28, its exclusive right to solicit plan votes.

Companies operating under Chapter 11 protection must submit to the court a plan outlining how they will repay creditors. Exclusive periods prevent other parties from filing competing plans, enabling the company to retain control of its reorganization process.

Here’s the actual pleading.

It’s clear that at this point New Century and its creditors are much more interested in working together rather than litigating their way to a lesser payout for everyone involved (you try paying litigation fees from the coffers of a bankrupt company and see how far it gets you).

The failed lender said in its filing that the vast majority of the claims against it are early payment default or covenant breach claims under various purchase agreements.