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Aegis creditors committee seeks to end exclusivity, file competing plan of liquidation
By Jennifer Lanning Drey
Portland, Ore., Oct. 10 - Aegis Mortgage Corp.'s official committee of unsecured creditors objected to the company's motion for a fourth extension to its exclusive periods to file a plan of liquidation and solicit votes on the plan, according to a Friday filing with the U.S. Bankruptcy Court for the District of Delaware.
The creditors believe the primary reason for Aegis' delay in filing a plan of liquidation is its desire to assist and protect majority shareholder Madeleine LLC's interest in the bankruptcy case.
According to the filing, Madeleine made $170 million of pre-bankruptcy advances to Aegis.
Madeleine's claims against Aegis' estate are subject to subordination, and the committee believes Madeleine is looking to reduce or eliminate the claims to which it is subordinated.
"The committee cannot countenance estate funds continuing to be used to attempt to enhance Madeleine's recovery," the creditors said in the filing.
The committee believes Aegis' creditors would be best served if exclusivity is terminated and it is allowed to file a "plain vanilla" plan of liquidation.
The creditors said once their plan was confirmed, an independent liquidating trustee could analyze and make a non-biased assessment of Madeleine's claims.
As previously reported, Aegis wants to extend its exclusive plan-filing period to Nov. 5 from Aug. 7 and the solicitation period to Jan. 5 from Oct. 6.
A hearing has been scheduled for Oct. 15.
Aegis Mortgage, a Houston-based mortgage production franchise, filed for bankruptcy on Aug. 13, 2007. Its Chapter 11 case number is 07-11119.
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