Aegis Mortgage's amended Chapter 11 plan meets objection from IRS

By Jennifer Chiou

New York, Sept. 29 - The Internal Revenue Service announced an objection to the confirmation of Aegis Mortgage Corp.'s second amended Chapter 11 plan due to the plan's failure "to provide for payment of interest on administrative tax liability," according to a filing with the U.S. Bankruptcy Court for the District of Delaware.

Further, the IRS said through counsel that the plan also doesn't provide for interest on its priority tax claim if it is not paid in full on the effective date.

The filing stated, among other things, that the objection also pertains to applicable interest rates that would result in a rate on tax claims that is lower than the required rate set by non-bankruptcy law.

As announced in August, the company's $2,205,000 sale of certain assets to Chotin Acquisition Co. LLC was approved by the court.

As previously reported, the assets to be purchased include all of the issued and outstanding shares of the capital stock of Aegis Investments Corp., the AEHC purchased investment certificates, the minute books, stockholder and transfer records, tax returns and accounting records of Aegis Investments and the Aegis Investments purchased investment certificates.

Under the proposed sale agreement, Aegis agrees to pay a $50,000 break-up fee and expenses up to $100,000 if Aegis terminates the agreement due to a superior offer. The company sold its mortgage servicing platform and certain mortgage servicing rights post-petition.

Aegis also already noted that the court approved the company's disclosure statement.

Under Aegis' plan of liquidation, treatment of creditors was set to include:

• Holders of administrative claims and priority tax claims will recover 100% in cash;

• Holders of priority claims will recover 100% from plan proceeds;

• Holders of secured claims will retain their liens on the applicable collateral and will recover 100% either in cash or through the return of the collateral securing the claim;

• Holders of convenience claims will recover 20% in cash;

• Holders of consolidated debtor general unsecured claims and consolidated debtor EPD/breach claims will recover 5% to 15% through a share of the remaining available net plan proceeds. The general unsecured creditors will also receive a share of a creditor contribution or WARN Act contribution;

• Holders of Aegis REIT unsecured claims and Aegis REIT EPD/breach claims will either be treated as unsecured creditors or receive a share of remaining available Aegis REIT assets;

• Holders of consolidated debtor equity interests and Aegis REIT common stock interests will receive no distribution under the plan; and

• Holders of Aegis REIT preferred stock equity interests will retain their interests or the interests will be canceled. These creditors are scheduled to receive little to no distribution.

Aegis Mortgage, a Houston-based mortgage production franchise, filed for bankruptcy on Aug. 13, 2007. Its Chapter 11 case number is 07-11119.

© 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.