The PMI Group files for Chapter 11 bankruptcy
Embattled mortgage insurer The PMI Group (PMI) filed for Chapter 11 bankruptcy Wednesday after failing in its attempt to overturn the Arizona Department of Insurance's seizure of the firm. The Walnut Creek, Calif.-based insurer noted in a release that it intends to use protections offered through the Chapter 11 bankruptcy reorganization process to find other options for preserving stakeholder value now that the company's under the umbrella of conservator, Arizona Department of Insurance. The firm noted that none of its subsidiaries entered Chapter 11. "The company will continue to operate in the ordinary course of business as 'debtor-in-possession' under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court," PMI said in a statement. PMI Group noted in its bankruptcy filing that it has anywhere between 299 to 1,000 creditors and estimated assets in the $100 to $500 million range. PMI noted in a release that it has $685 million of senior unsecured debt and $51.5 million of junior subordinated notes that are due and payable. The bankruptcy filing has stayed the note holders ability to enforce their rights and seek remedies, the insurer said. The note holders' rights are now subject to provisions tied to the U.S. bankruptcy code. Earlier this week, PMI was disappointed in a court's decision not to reverse the Arizona Department of Insurance's seizure of the company. PMI claims it was pursuing strategic alternatives to raise capital from new investors so it could allow PMI Mortgage Assurance to write new business. "To that end, the company and its advisors had been in discussions with potential investors in PMAC and with Fannie Mae and Freddie Mac (the "GSEs"), and the Federal Housing Finance Agency ("FHFA"), as conservator of the GSEs, with respect to the designation of PMAC as an eligible mortgage issuer by the GSEs," PMI wrote. "The company believed that the PMAC Transaction offered the prospect of significantly enhancing the value of the company and was potentially more favorable to the company's stakeholders than the liquidation of the company's assets." Those plans were halted by the regulator's seizure of the firm. Write to Kerri Panchuk.