American Business trustee requests approval of settlement with banks

By Alice Popovici

New York, Oct. 13 - American Business Financial Services, Inc.'s Chapter 7 trustee requested approval of a $100 million settlement agreement with three financial institutions, according to a Friday filing with the U.S. Bankruptcy Court for the District of Delaware.

Under the settlement, JP Morgan/Bear Sterns will pay the company $55 million, Credit Suisse will pay $37.5 million and Morgan Stanley will pay $7.5 million, according to the motion.

The financial institutions "have expressly denied and continue to deny all allegations of any wrongdoing or liability against them whatsoever arising out of any of the conduct, statements, acts or omissions alleged," the motion states.

A hearing has been scheduled for Nov. 4.

The settlement results from a lawsuit begun in 2006 by U.S. Trustee George Miller against the financial institutions, claiming "fraud, aiding and abetting fraud, aiding and abetting breaches of fiduciary duties, and conspiracy."

As previously reported, in July the company received approval of a $20 million settlement with its former counsel, Blank Rome LLP, resolving a lawsuit filed in 2008 by the trustee.

Philadelphia-based American Business Financial Services originates, sells and services home equity loans and money mortgage loans. It filed for Chapter 11 bankruptcy on Jan. 21, 2005. The case was converted to a Chapter 7 bankruptcy on May 17, 2005. The company's case number is 05-10203.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.