Walter Investment Management emerges from bankruptcy as Ditech Holding

By Caroline Salls

Pittsburgh, Feb. 9 – Walter Investment Management Corp. completed its financial restructuring plan and emerged from Chapter 11 bankruptcy under the name Ditech Holding Corp. on Friday, according to a news release.

Trading in Ditech Holding’s new common stock is expected to begin on Feb. 12 under the symbol DHCP.

Through its restructuring, the company said it eliminated about $800 million of outstanding corporate debt from its balance sheet and enhanced its financial flexibility.

“We are approaching from this process with a new name and an even stronger focus and ability to serve our customers,” George M. Awad, a continuing member of Ditech Holding’s board of directors, said in the release.

“We are excited about the prospects of our core business and are confident that we are well positioned to drive profitable growth and create value for our shareholders.”

Following the completion of the restructuring, the company said Ditech Holding will continue to serve customers through its operating subsidiaries, Ditech Financial LLC and Reverse Mortgage Solutions, Inc.

As previously reported, Walter Investment’s plan of reorganization was confirmed on Jan. 17 by the U.S. Bankruptcy Court for the Southern District of New York.

Under the pre-packaged plan, Walter’s pre-bankruptcy credit agreement will be amended to extend the maturity to June 2022 from December 2020, giving the company additional time to seek to implement its turnaround business plan.

In exchange for the extension, Walter will make principal payments to the term lenders based on an agreed amortization schedule.

Holders of senior notes claims will receive their share of $250 million of new second-lien notes and mandatorily convertible preferred stock with a liquidation preference of $100 million and which is convertible into 73% of the total outstanding shares of new common stock on the plan effective date, subject to dilution.

In addition, Walter said the remaining portion of the value that would have been distributable to holders of senior notes claims will instead be distributed to junior constituencies if the convertible notes claims class votes to accept the plan.

Specifically, new common stock and new warrants will be equally distributed to holders of convertible notes claims and existing equity interests. If the class did not accept the plan, then the new common stock will be distributed to holders of senior notes claims and the new warrants will not be issued.

Walter said this would result in the holders of convertible notes and existing equity interests receiving no recovery.

All debtor-in-possession claims, warehouse and repurchase facility claims, other priority claims, priority tax claims, other secured claims, revolving loan claims and general unsecured creditors are unimpaired by the plan and will be satisfied in full in the ordinary course of business.

Walter is a Fort Washington, Pa., servicer and originator of mortgage loans and servicer of reverse mortgage loans. The company filed bankruptcy on Nov. 30, 2017 under Chapter 11 case number 17-13446.

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