Mortgage Lenders former executives file lawsuit to obtain indemnification in legal proceedings

By Caroline Salls

Pittsburgh, April 24 - Two of Mortgage Lenders Network USA, Inc.'s former executives filed an adversary proceeding against the company seeking court confirmation that they are covered under Mortgage Lenders' indemnification policies in any actions brought against them in connection with their employment with the company.

According to a Tuesday filing with the U.S. Bankruptcy Court for the District of Delaware, the plaintiffs are former director, chief executive officer and president Mitchell Heffernan and former director and executive vice president James Pedrick.

Heffernan and Pedrick also asked the court to deem any claims they file under the company's indemnification provisions as Mortgage Lenders Network administrative expenses.

According to the adversary proceeding, on Jan. 18, the Banking Department of the State of New Hampshire sought to impose fines and license revocation for the company's alleged failure to follow banking department laws and regulations.

Heffernan and Pedrick were both named in the ensuing legal proceedings, and they said they were both forced to hire counsel and are subject to fines and criminal penalties for the alleged failure of the company to follow New Hampshire banking laws.

However, the motion said Mortgage Lenders has failed to indemnify them in connection with the New Hampshire action.

In addition, the Connecticut state's attorney has threatened to arrest and prosecute Heffernan for the company's failure to pay wages or commissions to some employees.

As previously reported, Heffernan's motion to keep Connecticut from arresting him in connection with the unpaid commissions was denied, and he has since appealed the court's ruling.

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

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.