Credit-Based Asset Servicing & Securitization LLC, the bankrupt subprime mortgage investor, won permission to auction its collateral-management business to seek bids higher than the $2.4 million offered by FIG LLC.
U.S. Bankruptcy Judge Allan Gropper in Manhattan today approved a sale procedure which calls for bids to be received before Dec.31, and an auction to be held Jan. 10. A break-up fee of $100,000 and expense reimbursement will protect the so-called stalking-horse bidder, which is an affiliate of Fortress Investment Group, said Peter Partee, a lawyer for C-Bass.
C-Bass also won approval of a revised request to use cash collateral on an interim basis in bankruptcy.
Andrew Rickert, C-Bass’s executive vice president, said in court papers that the company used most of its collateral over the 10 months leading up to its bankruptcy to pay down the balance on its senior loans, reducing $1.9 billion to $170 million. Remaining collateral included subordinated tranches of mortgage-backed securities, whole loans, claims against third parties, furniture and intellectual property, and its collateral-management business.
FIG LLC made an offer for that business, which services 17 privately offered collateralized bond obligations, under a purchase agreement dated Nov. 9, according to court papers.
Gropper had denied the company’s first request to use $50,000 to $100,000 worth of its lenders’ collateral. He said that C-Bass, as it’s known, hadn’t shown it needed the money on an emergency basis and that an agreement between the company and its lenders needed to be vetted by a committee representing unsecured creditors.
The case is In re Credit-Based Asset Servicing & Securitization LLC, 10-16040, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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