The board of directors of American Business Financial Services Inc. has elected to wind down the operations and liquidate the company -- leaving employees without a job.
The Philadelphia-based lender expects the wind down to be completed by the end of July, according to an announcement Monday, at which point it will close its corporate headquarters.
"The decision to discontinue operations was made after an extensive analysis of the company's prospects and careful consideration of other options for continuing the business, including a sale of the company," the announcement said.
As a result of the analysis, "it became clear to us that the cash requirements to create a sustainable operation were significantly greater than the company's available funding," Chief Restructuring Officer David Coles said in the announcement. "Therefore, the Board of Directors and I reached the conclusion that the best course of action for the Chapter 11 estate and creditors is to wind down the company in an orderly manner."
American Business said it closed its Texas office on Friday and its California and Maryland offices on Monday. The corporate headquarters in Philadelphia will reportedly be closed by the end of July.
"We regret the impact it will have on the company's constituents, particularly its employees, who have been very patient, loyal and understanding during the company's recent financial difficulties, Coles added. "We wish there were a viable alternative that would avoid a wind down of the company, but we believe this option offers creditors the best prospects for recovery."
American Business said it plans to ask the bankruptcy court for authorization to make retention and severance payments to employees who will help wind down and liquidate the company.
About 820 employees are expected to lose their jobs, according to the Associated Press.
Ocwen Federal was approved by the bankruptcy court to acquire the servicing operations, according to the announcement, and pending mortgage loan commitments and conditional approvals "will be funded in the normal course."