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First Magnus settles UBS loan repurchase, liquidation plan disputes
By Caroline Salls
Pittsburgh, Feb. 13 - First Magnus Financial Corp. has reached a settlement with UBS Real Estate Securities, Inc. in connection with a loan repurchase agreement default and related liquidation plan disputes, according to a Tuesday filing with the U.S. Bankruptcy Court for the District of Arizona.
According to the motion, UBS contends that First Magnus was required to turn over $1.06 million that it was holding in escrow as the interim servicer of loans owned by UBS. UBS said First Magnus has not returned the funds.
In addition, UBS has also asked the bankruptcy court to grant it a $20 million claim against First Magnus for purposes of voting on First Magnus' plan of liquidation, and UBS has objected to First Magnus' disclosure statement.
Since UBS is alleging that some aspects of First Magnus' plan violate its rights, the settlement extends UBS' deadline for filing objections to the plan and preserves its right to file an objection to any plan that does not incorporate the settlement.
However, First Magnus has agreed to incorporate the settlement into its plan, and UBS in turn has agreed to vote to accept the plan.
Under the settlement, UBS has agreed to assign its rights to the $1.06 million First Magnus collected for payment of taxes and insurance.
UBS will keep the $6.19 million in cash and cash equivalents that UBS is holding in an account established under the repurchase agreement.
Also, UBS has agreed to make a $150,000 settlement payment to First Magnus once the settlement is approved by the court.
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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