A hard money lender has filed for bankruptcy protection but continues to operate.
Quality Home Loans petitioned for reorganization under Chapter 11 bankruptcy protection on Tuesday, according to documents filed in U.S. Bankruptcy Court for the Central District of California.
The Agoura Hills, Calif.-based company announced it also filed bankruptcy petitions Wednesday for three affiliated investment funds it manages: California TD Investments LLC, Golden State TD Investments LLC and QHL Holdings Fund Ten LLC.
Quality describes itself as a “leading producer of ‘hard money’ loans requiring collateral values substantially in excess of loan amounts.” With 182 employees and offices in Agoura Hills, it originates first mortgage loans in California and 11 other states and sells a major portion of them into the secondary market, according to the announcement.
“We have been attempting to continue our lending operations and our sale of loans despite the dramatic and continuing deterioration in the secondary markets,” Quality Chief Executive Officer John T. Gaiser said in the announcement. “However, the market constrictions of recent days have so limited our ability to fund loans and sell those loans, that we had no choice but to seek bankruptcy court protection to protect the interests of our investors.“
While the wholesale hard money lender continues to operate on a limited basis and seeks to resume more extensive operations when market conditions allow, it is also considering potential sales of its business, according to the announcement.
The lender estimates assets are between $1 million to $100 million and its liabilities more than $100 million, according to the bankruptcy filing. It is estimated its number of creditors is between 1,000 to 5,000 and that funds will be available for distribution to unsecured creditors.
California T.D. holds the largest unsecured claim at about $11.1 million. Other creditors include Keller, First California Bank, Canon Financial Services, GE Vendor Financial and National City Technology, according to the bankruptcy filing.
