|As home builders warn that bank failures are causing more damage to their business, three firms went bankrupt.
Downey Financial Corp., the former parent of failed Downey Savings and Loan Association, F.A., filed for Chapter 7 bankruptcy liquidation last week in U.S. Bankruptcy Court, District of Delaware. Downey was closed by banking regulators on Nov. 24. The Federal Deposit Insurance Corporation, which was named receiver, immediately sold the banking operations to U.S. Bank, N.A.
In the filing, Downey Financial said it only had between one and 19 creditors. Assets were listed at between $10 million and $50 million, while liabilities were estimated at between $100 million and $500 million. Downey's lawyers collected $50,000 to process the bankruptcy.
Ace Mortgage Funding LLC filed for a voluntary petition for Chapter 7 bankruptcy liquidation on Nov. 5. The Indianapolis-based broker, which said it originated more than $3 billion during 2006, shut down operations in October. Ace had been a defendant or plaintiff in 27 complaints filed in federal courts since early 2005.
In the bankruptcy filing, which was signed by Chief Financial Officer Joseph C. Czopek, Ace said it owed between 1,000 and 5,000 creditors between $1 million and $10 million. Assets were estimated at between $1 million and $10 million.
The National Association of Home Builders issued a statement last month warning that its members are facing major hurdles when the Federal Deposit Insurance Corporation takes over a failed bank -- losing sales in the process. The FDIC is delaying draws on homes that have already been sold and requiring new appraisals in some cases. The group said severe financing problems are proliferating among builders in Texas -- one of the strongest U.S. markets.
"Builders with outstanding loans that are placed under FDIC control are frequently unable to contact a decision maker to deal with routine but time-sensitive matters related to loan draws or extensions," NAHB President and Chief Executive Officer Jerry Howard said in the statement. "Some builders have encountered what seem to be arbitrary criteria on whether or not loans receive continued funding."
Howard said the problems are turning good loans into problem assets.
LandAmerica Financial Group Inc. announced last week that it filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Eastern District of Virginia in Richmond, Va. Included in the filing was subsidiary LandAmerica 1031 Exchange Services.
LandAmerica agreed to sell subsidiaries Lawyers Title Insurance Corp., Commonwealth Land Title Insurance Co. and United Capital Title Insurance Co. for $298 million to Fidelity National Title Insurance Co. and Chicago Title Insurance Co. The closing, expected to occur this month, is subject to bankruptcy court approval.
LandAmerica Chairman and CEO expressed deep disappointment over the bankruptcy in the announcement, while Fidelity Chairman William P. Foley II in another announcement called the transaction "an exciting opportunity."
Downey Financial Corp., Debtor
Case No. 08-13041-CC, Nov. 25, 2008 (U.S. Bankruptcy Court, District of Delaware)
Ace Mortgage Funding, LLC, Debtor
Case No. 08-12645-CSS, Nov. 5, 2008 (U.S. Bankruptcy Court, District of Delaware)
LandAmerica Financial Group, Inc., Debtor
(U.S. Bankruptcy Court for the Eastern District of Virginia, Richmond, Va.