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A commentary by Carteret's Eric Weinstein

National Mortgage Professional
Jun 01, 2005

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.
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