ABFS receives interim approval of DIP financingmortgagepress.comABFS, DIP facility, debt
American Business Financial Services Inc. (ABFS) has received
interim court approval to use approximately $175 million of a $500
million debtor-in-possession (DIP) financing facility that will
allow the company to resume its loan origination business, pay
certain secured creditors and pay current business expenses.
"We are gratified to have achieved a resolution of the various
issues and to have obtained the court's interim approval of our
financing," said Anthony J. Santilli, chairman and chief executive
officer of ABFS. "We can now get back to our core business of
originating, selling and servicing home mortgage loans."
Mr. Santilli said he expected that the company would be able to
begin accepting applications and fund new loans after ABFS closes
on the financing agreements with the DIP lender.
Under the terms of the DIP facility, $100 million will be used
to provide warehouse financing that will enable the company to fund
new home mortgage loans, and the remaining $75 million would be
used to pay certain secured creditors as well as obtain working
capital. A hearing on final approval of the DIP financing will be
held.
"This is a critical first step in the restructuring of the
company," Mr. Santilli continued. "With a portion of the DIP
financing in place, we are hopeful that, through the restructuring
process, the company can improve its capital structure and take
advantage of the fundamental strength of its loan origination
business."
The company also announced that it has reduced its workforce in
Philadelphia by 134 employees. ABFS voluntarily filed to reorganize
under Chapter 11 of the Bankruptcy Code on Jan. 21 in Wilmington,
Del.
For more information, visit www.abfsonline.com.
