Former Thornburg trustee’s Chapter 11 plan effective as of Nov. 1

By Sarah Lizee

Olympia, Wash., Nov. 2 – The Chapter 11 plan for TMST, Inc., formerly Thornburg Mortgage, Inc., filed by Chapter 11 trustee Joel I. Sher, went into effect on Tuesday, according to a notice filed with the U.S. Bankruptcy Court for the District of Maryland.

The plan was confirmed on Oct. 12.

As previously reported, under the plan, holders of administrative claims, priority tax claims and priority non-tax claims against any debtor will be paid in full.

On the initial distribution date, the plan administrator will distribute an amount equal to all cash on hand less the amount of the effective date reserves on a pari passu basis to the holders of class 2a senior noteholder claims and the holders of allowed class 3a, 3b, 3c and 3d unsecured claims, if any, as determined on a debtor-by-debtor basis.

On each subsequent distribution date, the plan administrator will distribute an amount equal to all cash on hand less the amounts remaining in the effective date reserves on a pari passu basis to the holders of class 2a senior noteholder claims and the remaining holders of allowed class 3a, 3b, 3c and 3d unsecured claims, if any, as determined on a debtor-by-debtor basis.

The holders of allowed class 2b senior subordinated noteholder claims will not receive any distribution, unless and until the holders of allowed class 2a senior noteholder claims have been satisfied in full.

The holders of allowed class 2c junior noteholder claims will not receive any distribution, unless and until the holders of allowed class 2a senior noteholder claims and allowed class 2b senior subordinated noteholder claims have been satisfied in full.

Holders of TMST interests will not receive anything under the plan.

Holders of interests in TMHL, TMAS and TMHS will retain their interests.

Based in Santa Fe, N.M., TMST is a lender specializing in jumbo mortgages. It filed for bankruptcy on May 1, 2009 under Chapter 11 case number 09-17787.

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