Mortgage Lenders disclosure statement approved; plan confirmation hearing Feb. 3

By Jennifer Lanning Drey

Portland, Ore. Dec. 19 - Mortgage Lenders Network USA, Inc. obtained court approval for an amended disclosure statement for its plan of liquidation filed Friday with the U.S. Bankruptcy Court for the District of Delaware, according to a source familiar with the case.

The plan confirmation hearing is scheduled for Feb. 3.

When the company filed its original disclosure statement in March, it said it had 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 also said it had sold its mortgage loan servicing platform, as well as various properties from its real estate portfolio.

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

At the time, the company was seeking an additional $11.37 million in damages through various lawsuits.

Creditor treatment

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 $100 million in unsecured claims will recover 1% to 5% 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 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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