New Century Seeks Chapter 11 Protection
Monday April 2, 11:38 am ET
By Gary Gentile, AP Business Writer
Subprime Lender New Century Files for Bankruptcy, Fires 3,200 People
LOS ANGELES (AP) -- Subprime mortgage lender New Century Financial Corp. filed Monday for Chapter 11 bankruptcy protection, and said it would fire 3,200 workers immediately to better position the company for a possible sale.
Once the second-largest provider of subprime mortgages in the U.S. based on loan volume, the company fell on hard times amid a spike in mortgage defaults caused by borrowers unable to make payments.
New Century, based in Irvine, filed the bankruptcy action in U.S. Bankruptcy Court for the District of Delaware.
It said it has agreed to sell its loan servicing business to Carrington Capital Management LLC and its affiliate for approximately $139 million, subject to the approval of the bankruptcy court.
CIT Group and Greenwich Capital Financial Products Inc. have agreed to provide up to $150 million in working capital to facilitate the reorganization process, the company said.
More than two dozen subprime lenders have shut down in recent months and others are scrambling to stay in business.
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