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Luminent DIP lender claims company defaulted under loan agreement
By Jennifer Lanning Drey
Portland, Ore., Oct. 7 - Luminent Mortgage Capital, Inc.'s debtor-in-possession financing lender filed a lawsuit on Monday against the company alleging that Luminent breached the terms of the DIP agreement, according to a filing with the U.S. Bankruptcy Court for the District of Maryland.
In the filing, DIP lender Arco Capital Corp. Ltd. said Luminent drew $200,000 under the facility when it already had a similar amount of cash on hand.
Arco said that by requesting to borrow the $200,000, Luminent had represented it had already used all cash on hand and cash collateral. Arco said the representation was incorrect and misleading, which constituted an event of default.
The lender said it sent Luminent a written request for repayment of the $200,000 loan, but Luminent has not yet complied with the request.
In response to the alleged defaults, Arco is seeking a temporary restraining order or a preliminary injunction preventing Luminent from transferring, using or disposing of the $200,000 loan.
Additionally, Arco asked for a judgment confirming that the company breached the agreement and at least $200,000 in damages.
The lender is also seeking confirmation that conversion of Luminent's Chapter 11 bankruptcy case to Chapter 7 for liquidation would constitute an event of default.
As previously reported, Luminent's request for final approval of its original loan agreement with Arco was denied on Sept. 30 and is being reconsidered at the company's request.
Luminent, a San Francisco-based real estate investment trust that invests in mortgage-backed securities and loans, filed for bankruptcy on Sept. 5. Its Chapter 11 case number is 08-21389.
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