USA Commercial Mortgage's U.S. Trustee asks court to convert bankruptcy case to Chapter 7

By Caroline Salls

Pittsburgh, Oct. 25 - USA Commercial Mortgage Co.'s U.S. Trustee asked the U.S. Bankruptcy Court for the District of Nevada to convert the company's Chapter 11 case to Chapter 7, according to a Tuesday court filing.

According to the motion, during the company's bankruptcy case, it has generated income only from the collection of loans that existed pre-bankruptcy, has not generated any income from post-bankruptcy operations, has failed to obtain debtor-in-possession financing, has advised the court of its intention to liquidate its loan servicing operations and most solvent investment fund and has proved unable to successfully negotiate and file a consensual plan approved by the official committees within the plan filing exclusivity period.

The U.S. Trustee said cause exists for conversion to Chapter 7, as the ongoing expenses associated with the company's efforts to liquidate estate assets through Chapter 11 proceedings constitute a continuing loss to its estates.

In addition, the U.S. Trustee said the lack of ability to file a plan shows that there is no reasonable likelihood for rehabilitation of the company.

A hearing is scheduled for Nov. 28.

USA Commercial Mortgage, a privately held real estate lender based in Las Vegas, filed for bankruptcy on April 13, 2006. Its Chapter 11 case number is 06-10725.

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