Delta Financial Corporation became the latest subprime lender casualty when it filed a Chapter 11 petition yesterday in the United States Bankruptcy Court for the District of Delaware. Related debtors Delta Funding Corporation, Renaissance REIT Investment Corp. and Renaissance Mortgage Investment Corporation also filed petitions in these cases that are being presided over by Judge Christopher S. Sontchi.
According to the affidavit that the debtors filed in support of their first-day motions, in recent months they ceased originating new loans and terminated the employment of 1,300 employees.
In the twenty-one months between January 2006 and September 2007, the debtors originated $6.9 billion in loans. However, in recent months, the securitization market for their loans became severely restricted, and their warehouse lenders began issuing margin calls for loans to the debtors. The debtors state that they are considering the options of reorganizing their businesses or selling their assets.
