Fremont General Begins Reorganization Plan
Recently, a California bankruptcy judge gave approval to Fremont General Corporation’s reorganization plan by investment firm, Signature Group Holdings, LLC. Fremont General was at one time one of the country’s largest subprime lenders. Now, it finds itself rising from bankruptcy.
According to the plan, shareholders of Fremont General Corp. will control and actually own nearly two-thirds of the company. Additionally, Fremont is allowed to maintain roughly $769 million in net operating loss credits—to be used in offsetting any future taxable income.
The plan also proposes a $10.3 million equity infusion as well as the issuance of warrants to gain additional shares. As of now, the company, in going through its reorganization, looks to acquire roughly 110 million shares of common stock, issued and outstanding. It seeks to direct the business towards lending to and obtaining middle-market companies.
The plan most recently went into effect as Fremont changed their name to, Signature Group Holdings, Inc.
Fremont, a prominent financial services organization, was at one time, valued at $7 billion. In 2007, the subprime mortgage market crashed, forcing its subsidiary’s regulators to stop writing loans. Eventually, CapitalSource, Inc., purchased Fremont General’s California bank branches while creditors and others sought ways to take over the company.
Signature Group Holdings, last fall, introduced a reorganization plan which would later gain support from Fremont’s former Chairman and CEO, James McIntyre, and shareholders. McIntyre, incidentally, is the company’s biggest shareholder. The founder of Foothill Capital Corporation, John Nickoll, will serve as Chairman of the newly formed board of directors.Post Tags: Bankruptcy