Fremont General Corp. has exited bankruptcy with a new name and a new strategy.
When it was hit with a cease-and-desist order from the Federal Deposit Insurance Corporation in March 2007, then-subsidiary Fremont Investment & Loan was the sixth biggest subprime mortgage lender in the country with a 5 percent market share.
Fremont General filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code in June 2008, while Fremont Investment was acquired by CapitalSource Inc. in July 2008.
“The bankruptcy set off an intense battle for control of Fremont by multiple creditor, equity and interested constituents,” according to a statement today announcing that Fremont General has emerged from bankruptcy.
Six reorganization plans were vying for Bankruptcy court approval. The winning proponent, Signature Group Holdings LLC, agreed to a $10.3 million capital infusion.
Signature’s plan of reorganization has been approved by Fremont’s impaired debt and equity constituents and confirmed by Judge Erithe Smith of the U.S. Bankruptcy Court for the Central District of California. The plan became effective on June 11.
The reorganized company will have approximately 112 million shares of common stock issued and outstanding trading under the symbol SGGH.PK. Existing Fremont shareholders will hold around two-thirds of the company’s outstanding shares.
Former Fremont chairman and chief executive officer James McIntyre remains the company’s individual shareholder.
“Additionally, Signature’s plan of reorganization projects that approximately $769 million in net operating loss carry-forwards will be available to offset future taxable income,” the statement said.
As part of the plan, Fremont General changed its name to Signature Group Holdings Inc. It will target credit-oriented special situation lending and investments in middle-market companies on a national basis.
John Nickoll has been elected chairman of Signature’s board of directors. He founded Foothill Capital Corp., which the statement indicated had been the largest independent commercial finance company in the country before merging with Wells Fargo.
Key directors and officers of the new entity include Signature co-founders Craig Noell and Kyle Ross, Signature Managing Director Tom Donatelli, and turnaround specialist and distressed investor Kenneth Grossman.
