Bankruptcy judge gives Fieldstone more time

The Baltimore Sun

Fieldstone Mortgage Co., the Columbia subprime lender that filed for Chapter 11 last year in the midst of the nationwide credit crunch, has received a three-month extension to submit its reorganization plan.

Last week, James F. Schneider, a judge in Baltimore's U.S. Bankruptcy Court, extended Fieldstone's deadline through June 20. It initially was due March 22.

In a court filing, the company said it needs the extra time to continue negotiations with parties interested in buying its assets or participating in the reorganization.

"The Debtor has received proposals from several parties and is in the process of evaluating those proposals," Fieldstone's attorneys wrote, before warning that there was a chance none of the proposals would be accepted.

"In light of the volatile financial markets, there is no certainty that any proposal will ultimately result in the proposal of a plan of reorganization," the filing said.

Until negotiations are complete, the 13-year-old company can't craft a plan. It expects the process "will take several more months."

Four of the top 10 business bankruptcy filings last year "were direct casualties of the subprime mortgage meltdown," according a 2008 report by global law firm Jones Day. At least 50 such lenders have folded or filed for bankruptcy, the report said.

Subprime lender New Century Financial Corp. signaled the start of the credit crisis when it filed for bankruptcy protection a year ago. Jones Day says the company had the largest public bankruptcy filing last year, and the ninth-largest ever. New Century wrote more than $51 billion worth of loans in 2006.

Fieldstone was once ranked among the top 20 subprime lenders in the country, originating $5.5 billion in loans in 2006. But the faltering housing market and rising monthly mortgage payments led customer after customer into default.

In February the company agreed to be bought by Credit-Based Asset Servicing and Securitization, based in New York. Last summer, C-BASS said it might have to write off its Fieldstone investment. Its Web site says the company has since "exited the securitization business" and is currently liquidating its portfolio.

Fieldstone quit making loans last year, and filed for bankruptcy protection in November.

Court filings show the former local lender has $121 million in liabilities, including claims from Maryland employees, but less than $15 million in assets.

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