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Walter Proposes Restructuring Plan to Avert Potential Bankruptcy

Walter Investment Management Corp. (NYSE: WAC) on Tuesday announced a proposed restructuring plan amid its financial woes, warning that it will enter Chapter 11 bankruptcy if the stakeholders can’t agree on the proposal.

The troubled servicer, which continues to service reverse mortgages under its Reverse Mortgage Solutions brand, said it entered into a restructuring support agreement (RSA) with certain lenders on Monday, under which the company would buy back some of its loans for a total of $100 million along with other milestones.

But if a 95% majority of certain stakeholders can’t agree to that plan by November 1, the company will move ahead with a prepackaged in-court bankruptcy plan, according to an 8-K form filed with the SEC late Tuesday afternoon.

“After careful consideration, we have taken a significant step to improve Walter’s financial position,” president and CEO Anthony Renzi said in a statement. “The actions we have taken, combined with the support of our existing lenders, should help us strengthen our balance sheet and position Walter for a sustainable future.”

This represents the most recent milestone in a shaky year for the servicer, which exited the reverse mortgage origination marketplace in January — just a few years after acquiring RMS for $122 million in 2012 and Security One for up to $31 million the following year. The Fort Washington, Pa.-based servicer has been forced to admit that some of its financial filings could no longer be relied upon, and was warned by the New York Stock Exchange that its stock could be delisted if its value doesn’t increase.

Written by Alex Spanko