Reverse Mortgage committee eyes authority to handle Leadenhall claims

By Sarah Lizee

Olympia, Wash., March 31 – Reverse Mortgage Investment Trust Inc.’s official committee of unsecured creditors is seeking authority to prosecute claims against lender Leadenhall Capital Partners LLC on behalf of the debtors, according to a motion filed Thursday with the U.S. Bankruptcy Court for the District of Delaware.

The debtors have consented to the committee’s request to do so.

The committee said it has identified several material challenges concerning the scope, extent and validity of Leadenhall’s prepetition security interest.

The group said Leadenhall’s security interest does not extend to various unencumbered assets and is, at least in part, subject to avoidance as unperfected as of the petition date.

Even to the extent any prepetition secured claims (and related adequate protection claims) exist, Leadenhall expressly agreed to subordinate and otherwise limit any additional recoveries it receives from the debtors’ estates in a transfer stipulation and debtor-in-possession notes term sheet, the committee said.

The group said the declaratory relief sought in this regard seeks to hold Leadenhall to its post-petition agreements, under which Leadenhall agreed to limit the treatment it receives on its pre- and post-petition claims.

“Provided that this court approves the committee’s motion authorizing it to pursue the complaint, these claims and causes of action will potentially result in millions of dollars being made available for distribution to creditors of these estates, thereby materially enhancing creditor recoveries,” the committee said in its motion.

The Bloomfield, N.J.-based reverse mortgage issuer filed Chapter 11 bankruptcy on Nov. 30 under case number 22-11225.

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