Luminent lender trying to terminate DIP loan; court limits transfers

By Caroline Salls

Pittsburgh, Oct. 10 - Luminent Mortgage Capital, Inc. said its debtor-in-possession financing lender has accelerated payment of the amount borrowed on the DIP loan and terminated the facility following an alleged fund transfer violation that prompted an event of default, according to an 8-K filed Friday with the Securities and Exchange Commission.

The company said it has contested the alleged default, and the U.S. Bankruptcy Court for the District of Delaware issued a temporary restraining order on Thursday that prohibits the company from transferring or otherwise disposing of the DIP funds until the earlier of 10 days from the date of the order or the conclusion of the hearing on Luminent's emergency papers filed to contest the default, which is scheduled for Oct. 16.

As previously reported, Luminent obtained bankruptcy court approval to borrow up to $400,000 of the DIP financing on an interim basis on Sept. 15, and the court granted the company final approval of the loan on Oct. 6.

Luminent said it borrowed $200,000 of the DIP financing on Sept. 29, and lender Arco Capital Corp. Ltd. made the default claim on Oct. 6.

In addition to the payment acceleration and DIP facility termination, the company said Arco has reduced its commitment to lend under the credit agreement to zero.

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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