Walter Investment Management Corp. has filed for bankruptcy as expected. The company hopes to wipe out nearly $1 billion in outstanding debt.
On Thursday, the Fort Washington, Pennsylvania-based firm disclosed that it
filed a voluntary chapter 11 petition in U.S. Bankruptcy Court for the Southern District of New York.
Walter had previously revealed in October that it had reached agreements with creditors to file bankruptcy and cut its outstanding corporate debt by $700 million.
Yesterday’s announcement indicated that
the reduction in debt is now expected to be $800 million.
Shares of Walter, which had traded at more than $8 during the past year, were trading at 47 cents Friday afternoon — though that was up 10 cents for the day.
Operating subsidiaries Ditech Financial LLC and Reverse Mortgage Solutions Inc. are not expected to file for chapter 11 but are expected to continue their operations in the ordinary course.
Subject to court approval, Walter has obtained a commitment for a $1.9 billion warehouse line to support Ditech and RMS during the reorganization process.
“The actions taken today are intended to reduce the company’s debt, strengthen its balance sheet and better enable Walter to focus on its business, including the growth of its origination and servicing businesses, new technology, innovation, and other areas that are critical to the company’s success,” the statement said.
