First Guaranty committee objects to statement; hearing moved one day

By Sarah Lizee

Olympia, Wash., Sept. 28 – First Guaranty Mortgage Corp.’s disclosure statement for its Chapter 11 plan drew an objection from the official committee of unsecured creditors, according to court documents filed with the U.S. Bankruptcy Court for the District of Delaware.

The committee said the disclosure statement is “fundamentally flawed and deficient in key information.”

“At its core, the plan is nothing more than another means by which Pimco, the debtors’ sole equity owner, will continue to control these bankruptcy cases for its sole benefit while leaving the debtors’ unsecured creditors with nothing,” the group said.

The committee said the plan fails to explain how the company’s obligations will be satisfied and with what assets.

It also contains all-encompassing releases for various parties, including Pimco and the debtors’ directors and officers, without proper justification and despite there being colorable estate causes of action against the insiders, the committee added.

The group also said the plan “patently fails to meet various tests and standards” for confirmation.

As previously reported, the disclosure statement also drew an objection from Regions 3 and 9 U.S. trustee Andrew. R. Vara, who also had concerns about the lack of information given to creditors.

The court adjourned the hearing on interim approval of the disclosure statement by one day to Sept. 29, according to a separate notice.

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

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