First Magnus files liquidation plan

By Caroline Salls

Pittsburgh, Oct. 16 - First Magnus Financial Corp. filed its plan of liquidation and related disclosure statement Monday with the U.S. Bankruptcy Court for the District of Arizona.

According to the disclosure statement, First Magnus will wind down its operations, and a liquidation trustee and litigation trustee will be appointed.

The company said it expects to distribute $28 million to $44 million to unsecured creditors, and additional recoveries may be available for unsecured creditors through the capture of equity following the sale of the remaining portion of the company's warehouse loan portfolio, the sale of intellectual property and any litigation proceeds.

Treatment of creditors under the plan will include:

• Holders of administrative claims and non-tax priority claims will be paid in full on the plan effective date;

• Holders of secured claims will receive full payment in cash on or before the plan effective date and any assets subject to a lien of the secured creditor will be abandoned;

• Holders of general unsecured claims will receive cash from a dividend fund;

• Holders of Washington Mutual EPA repurchase agreement will return $3.15 million in loans to First Magnus and will not assert any claims against First Magnus in connection with the repurchase agreements;

• Holders of repo participants claims will have the right to liquidate mortgages under repurchase agreements; and

• Holders of subordinated claims and equity security interests will receive no distribution under the plan.

First Magnus, a Tucson, Ariz., mortgage loan originator, filed for bankruptcy on Aug. 21. Its Chapter 11 case number is 07-10578.

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