American Business Financial Services says cannot make note payments, may file bankruptcy

By Jeff Pines

Washington, Dec. 23 - American Business Financial Services Inc. said it cannot make the payments on its notes and may have to file for Chapter 11.

The Philadelphia-based company filed an S-2 registration statement Thursday with the Securities and Exchange Commission to sell $280 million of subordinated debentures, but the company cannot sell any debentures until the statement is declared effective.

As a result, American Business Financial said it cannot make the principal and interest payments on its subordinated debentures and senior collateralized subordinated notes when due, which will constitute a default.

In addition, the company is not in compliance with its credit facilities, but it is trying to obtain a waiver. American Business Financial has received a default notice from the landlord of its Philadelphia office.

In light of the current situation, management said it decided to postpone its annual shareholder meeting.

American Business Financial originates, sells and services home equity loans and money mortgage loans.

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