Judge clears New Century liquidation plan for vote
NEW YORK (Reuters) - A federal bankruptcy judge has cleared the way for New Century Financial Corp NEWCQ.PK creditors to vote on a liquidation plan for the former subprime lending giant, court papers show.
Judge Kevin Carey of the U.S. bankruptcy court in Wilmington, Delaware, on Tuesday approved New Century's disclosure statement, which is intended to provide creditors with adequate information to evaluate a Chapter 11 plan.
The judge wrote that approval "is in the best interests of the debtors' estate and creditors." He set an April 24 hearing to confirm New Century's planned liquidation.
According to court papers, there were $35.1 billion of claims filed through January 21 against Irvine, California-based New Century and its affiliates.
New Century said that under its liquidation plan, most unsecured creditors would recover less than 25 cents on the dollar, and some as little as 1 cent on the dollar. It expects unsecured creditors would recover $1 billion to $2 billion on about $7.4 billion of eligible claims, court papers show.
Other creditors, including creditors with secured or "priority" claims, would recover in full, the papers show. Shareholders would get nothing.
New Century was the largest independent U.S. provider of home loans to people with poor credit before filing for Chapter 11 bankruptcy protection last April 2.
The company's collapse was one of the first in the U.S. housing crisis, which has caused well over 100 home loan providers to quit the industry.
On February 29, bankruptcy investigator Michael Missal filed his report on New Century's collapse with the bankruptcy court, but it has not been publicly released.
Carey had appointed Missal last June to investigate alleged misconduct at New Century.
The company has said it overstated some earnings, that the U.S. Securities and Exchange Commission opened a formal probe into its activities, and that federal prosecutors in California were examining accounting errors and trading in its stock.
(Editing by Gary Hill)
