New Century Financial Corp. has filed for bankruptcy protection, laid off thousands of employees and begun dismantling the business.
The voluntary chapter 11 filing was made today U.S. Bankruptcy Court for the District of Delaware, the Irvine, Calif.-based lender announced.
In connection with the bankruptcy, New Century reported it immediately fired 3,200 workers -- or 54 percent of its staff -- hoping "to properly size these businesses in preparation for possible sale."
The CIT Group and Greenwich Capital Financial Products Inc. have agreed to provide up to $150 million in debtor-in-possession financing to the bankrupt firm, subject to bankruptcy court approval, the real estate investment trust reported.
The "financing is expected to provide New Century with funding to facilitate the chapter 11 process," according to the announcement.
The financing deal includes $50 million at closing and another $100 million in potential subsequent financing, the statement said.
In addition, Carrington Capital Management will reportedly acquire for $139 million New Century's servicing platform and assets subject to bankruptcy court approval.
Greenwich will acquire loans and residual interest in loan securitizations for $50 million -- subject to court approval, the beleaguered lender announced.
"This was a very hard step for me personally and clearly not the outcome I would have preferred," said New Century President and CEO Brad A. Morrice in the statement. "However, given the sudden and significant challenges facing our industry and New Century specifically, bankruptcy is the best means available to allow the company's assets and operations to be sold through an orderly process."
Morrice concluded the nonprime sector will remain an important part of the domestic economy.