Fieldstone asks court to approve release agreement in order to gain full access to DIP facility

By Jennifer Lanning Drey

Portland, Ore., March 10 - Fieldstone Mortgage Co. requested court approval of an agreement with Credit-Based Asset Servicing and Securitization LLC (C-Bass) under which Fieldstone would release its claims against C-Bass in order to gain full access to its $3.8 million debtor-in-possession facility from C-Bass, according to a Monday filing with the U.S. Bankruptcy Court for the District of Maryland.

Under the terms of the DIP, Fieldstone, a wholly owned subsidiary of C-Bass, must grant C-Bass the release in order for C-Bass to be allowed to fund the full amount, according to the motion.

As previously reported, Fieldstone obtained a $3.8 million DIP commitment from C-Bass.

However, the final DIP order contained a condition precedent to C-Bass advancing the amounts set forth in the DIP facility, which stated that only those amounts available through the 60th day following the company's bankruptcy filing, as set forth in the proposed budget, would be made available to Fieldstone unless the two parties entered into a mutual release agreement.

Fieldstone said it has performed an extensive investigation into potential claims it may have against C-Bass and believes the inherent risks, costs and timing associated with the litigation of the claims is far outweighed by the certainty of the full funding associated with the release agreement.

According to Fieldstone's analysis, the approximate value of its claims against C-Bass ranges between $2.8 million and $4.7 million.

C-Bass acknowledges that claims may lie against it but the company says the claims, if any, are no more than $2.8 million.

Fieldstone said a settlement in the mid-range between its estimated liability and C-Bass' estimate would "not only be a fair result, but it would be far above the lowest level of reasonableness."

A hearing has been scheduled for April 4.

Fieldstone is a mortgage company based in Columbia, Md., and C-BASS is a mortgage company based in New York.

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