Luminent Mortgage files plan of reorganization; Arco, unsecured creditors to receive new equity

By Caroline Salls

Pittsburgh, Sept. 19 - Luminent Mortgage Capital, Inc. filed its plan of reorganization Friday with the U.S. Bankruptcy Court for the District of Maryland.

As previously reported, secured creditor Arco Capital Corp, Ltd., WaMu Capital Corp. and holders of 100% of the company's outstanding convertible notes entered into a forbearance and plan support agreement under which they agreed to vote in favor of a plan of reorganization that contains specified terms, including the cancellation of all of Luminent's outstanding common and preferred shares.

The plan also calls for the cancellation of all subordinated debt instruments and for the distribution to allowed unsubordinated general unsecured creditors, including the companies' convertible noteholders, but excluding Arco and its affiliates, of 41% of the common stock of the reorganized companies and $2.75 million.

Also under the agreement, Luminent and its subsidiaries will fund the cash portion of the distribution to unsubordinated general unsecured creditors by issuing preferred stock to Arco or its designees.

Arco has also agreed to provide the company with up to $2.8 million in exit financing.

Treatment of creditors will include:

• Holders of administrative claims, priority tax claims, priority non-tax claims and priority non-tax claims will recover 100% in cash;

• Holders of secured claims of the Arco Capital Corp. parties will receive 51% of the reorganized company's equity units and other distributions agreed to under the plan support agreement;

• Holders of general unsecured claims will receive a share of an unsecured distribution fund and 41% of the reorganized company's equity units;

• Holders of convenience claims will receive their share of a convenience class fund; and

• Holders of TRUPS claims, subsidiary debtor unsecured claims and existing interests will receive no distribution under the plan.

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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