Mortgage Lenders Network files liquidation plan

By Caroline Salls

Pittsburgh, March 13 - Mortgage Lenders Network USA, Inc. filed a plan of liquidation and related disclosure statement Wednesday with the U.S. Bankruptcy Court for the District of Delaware.

According to the disclosure statement, the company has liquidated most of its assets, including the $400 million in mortgage loans and $12.5 million in servicing assets. One airplane was also sold for $896,000.

Mortgage Lenders said it also sold its mortgage loan servicing platform, as well as various properties from its real estate portfolio.

In addition, the company has received $11.27 million in lawsuit-related payments.

The company said it is continuing to liquidate is remaining assets, and it is seeking an additional $11.37 million in damages through various lawsuits.

Mortgage Lenders said it would have at least $8 million in liquidation proceeds, based on an assumed plan effective date of May 31. The company said $3.2 million of these proceeds, as well as any remaining litigation proceeds, would be available for distribution to unsecured creditors after payment of administrative and priority claims.

Treatment of creditors under the plan will include:

• Holders of $100,000 in administrative claims and $3.8 million in priority claims will recover 100% in cash;

• Holders of $300,000 in priority tax claims will recover 100% in funds from the company's tax account;

• Holders of other secured claims will receive either the proceeds from the sale of the collateral securing the claim or the return of the collateral;

• Holders of $600 million in unsecured claims will recover 1% to 15% through a share of net plan proceeds, including available cash and any additional liquidation or litigation proceeds. These creditors will not receive a distribution until cash is first reserved for potential payment of disputed claims; and

• Holders of subordinated claims and equity interests will receive no distribution under the plan.

Mortgage Lenders Network, a Middletown, Conn.-based lending company, filed for bankruptcy on Feb. 5, 2007. Its Chapter 11 case number is 07-10146.

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