A federal court formally approved Walter Investment Management Corporation’s (NYSE: WAC.BC) prepackaged Chapter 11 plan this week, though the company expects its remaining time in bankruptcy protection to be short.
The Fort Washington, Pa.-based financial firm — which services Home Equity Conversion Mortgages through its Reverse Mortgage Solutions subsidiary — first floated the idea of a prepackaged Chapter 11 plan in October, with lenders and noteholders formally approving the deal in December.
RMS, along with fellow Walter subsidiary Ditech, were not directly involved in the filing, and will continue to operate in the normal course of business.
The United States Bankruptcy Court for the Southern District of New York approved the proposal on Wednesday, and Walter officials plan to emerge from the restructuring no later than January 31 — a turnaround time of two weeks.
Once the plan is complete, Walter will have shed $800 million in corporate debt, while also achieving “enhanced financial flexibility,” the company said.
The company also announced a new post-bankruptcy board of directors, with three existing members — George Awad, Daniel Beltzman, and Neal Goldman — joining six other new directors.
“We look forward to officially welcoming the incoming members of our board, who will bring proven track records and new perspectives from both inside and outside our industry, and will play an important role in helping guide our company forward following our financial restructuring process,” Awad, Walter’s current chairman of the board, said in a statement.
“Once formally appointed, I look forward to working closely with them to create value as we advance our mission of serving our customers throughout the homeownership journey.”
The maneuver comes at the end of tumultuous 12 months for Walter, which saw the company suspend its reverse mortgage originations through RMS and Security One Lending, admit issues with its past financial reporting, and receive delisting warnings from the New York Stock Exchange amid drops in its share price and market capitalization.
WAC.BC stock spiked amid the news: After closing at $0.76 per share on Wednesday, shares opened Thursday’s trading at $0.97 each.
Written by Alex Spanko