First Guaranty Mortgage gets interim approval of disclosure statement

By Sarah Lizee

Olympia, Wash., Oct. 7 – First Guaranty Mortgage Corp.’s recently amended disclosure statement for its Chapter 11 plan received interim approval Friday, according to an order filed with the U.S. Bankruptcy Court for the District of Delaware.

The combined hearing on final approval of the disclosure statement and confirmation of the plan is scheduled for Oct. 31.

The debtors plan to liquidate their remaining assets, wind down their affairs, and be dissolved through a liquidating trust.

According to the disclosure statement, which was amended most recently on Thursday, the debtors, the cash flow debtor-in-possession lender and the official committee of unsecured creditors were able to reach a settlement on the terms of the plan.

Under the settlement, after payment of senior claims, any residual value in the proceeds of the liquidating trust assets will be distributed to the holder of the cash flow DIP claims, until paid in full, and after that to the holders of general unsecured claims.

Administrative claims, DIP repo loan claims, priority tax claims, priority non-tax claims and other secured claims will be paid in full.

Holders of secured prepetition facility claims will receive the following: delivery of the mortgage loans and other collateral purchased or securing their respective claims or the net proceeds of the liquidation of those mortgage loans and other collateral; or treatment on other terms agreed between the debtors, the cash flow DIP lender and the holders of the secured prepetition claims.

Holders of prepetition LVS II offshore guaranty claims will receive any collateral, up to the amounts of $6.59 million, granted to Customers Bank under a prepetition loan agreement.

Interests will be canceled with no distribution to holders.

The Plano, Tex.-based mortgage lender filed Chapter 11 bankruptcy on June 30 under case number 22-10584.

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