Quality Home Loans debtors file plan of reorganization

By Caroline Salls

Pittsburgh, Dec. 23 - Quality Home Loans debtors QHL Holdings, Fund Ten, LLC and Golden State TD Investments, LLC filed a joint plan of reorganization and related disclosure statement Monday in the U.S. Bankruptcy Court for the Central District of California.

The plan will be funded by cash on hand, future cash received from Countrywide and Bayview NIM bond proceeds, any net proceeds received from prosecution of rights of action and future litigation proceeds.

According to the disclosure statement, the plan is based on a settlement agreement that resolves disputes related to the allocation of cash on hand and NIM proceeds.

Under the settlement, the company said the debtors' funds stand to receive more than $7.5 million in cash and litigation rights that could have a value of as much as $20 million.

Treatment of creditors will include:

• Holders of administrative claims, general unsecured claims and priority tax claims will be paid in full;

• Pacificor will receive $9.75 million in funds' cash, plus $5.75 million of the NIM proceeds received after June 30 and 33.3% of any NIM proceeds in excess of $10 million until Pacificor has been paid $42 million. However, the company said Pacificor will probably only receive about $29 million;

• Holders of QHL and class plaintiff claims will receive no distribution;

• Holders of Cal TD claims will share in any net litigation recoveries on account of derivatives claims; and

• Members of Fund Ten and Golden State will receive their share of $5 million of cash on hand, with 65% going to Fund Ten and 35% to Golden State, as well as $2.4 million of NIM proceeds on the plan effective date and between $1 million and $4 million of NIM proceeds between May 2009 and 2011.

These members will also share in net litigation recoveries.

Quality Home Loans, an Agoura Hills, Calif., mortgage lender, filed for bankruptcy on Aug. 21, 2007. Its Chapter 11 case number is 07-13006.

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