Ditech U.S. Trustee objects to disclosure, cites lack of information

By Caroline Salls

Pittsburgh, April 8 – The U.S. Trustee overseeing Ditech Holding Corp.’s Chapter 11 case objected to the proposed approval of the disclosure statement for the company’s Chapter 11 plan, according to a Friday filing with the U.S. Bankruptcy Court for the Southern District of New York.

Region 2 U.S. Trustee William K. Harrington said in his objection that “the disclosure statement fails to provide adequate information regarding the scope of the plan’s discharge, release and injunction provisions.”

“The facts of these cases demand a simple, clear explanation of what is being discharged, released and enjoined and why, particularly with respect to consumer claims,” the objection said.

Specifically, Harrington said the company’s schedules list thousands of unsecured litigation claims held by individuals with minimal additional information, and, as recently as an April 4 meeting of creditors, Ditech was still “evaluating” the scope of the plan’s proposed discharge related to these and other claims.

“If the debtors are unable to articulate the full scope of the proposed discharge on the vast number of claims in this case, creditors cannot possibly be expected to understand these provisions,” the objection said.

In addition, Harrington said the company is deeming unsecured creditors to reject the plan and is not proposing to solicit their votes.

The U.S. Trustee the Ditech debtors are seeking to discharge or release a vast number of claims, including consumer borrower claims, without appropriate notice.

The disclosure statement hearing is scheduled for April 11.

Ditech is a mortgage servicer, asset manager and portfolio owner based in Fort Washington, Pa. The company filed bankruptcy on Feb. 11 under Chapter 11 case number 19-10412.

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