Former Thornburg trustee seeks approval of $38 million settlement

By Sarah Lizee

Olympia, Wash., April 5 – The Chapter 11 trustee overseeing the bankruptcy case of TMST, Inc., formerly Thornburg Mortgage, Inc., is seeking approval of a settlement with JPMorgan Chase Funding Inc., Citigroup Global Markets Ltd., Citigroup Global Markets, Inc., Credit Suisse Securities (USA) LLC, Credit Suisse International and UBS AG, according to a motion filed Monday with the U.S. Bankruptcy Court for the District of Maryland.

Trustee Joel I. Sher had filed an avoidance-of-transfer and breach-of-contract adversary proceeding against the group on April 30, 2011. To resolve the trustee’s claims, the parties engaged in lengthy negotiations that later resulted in the settlement.

Sher said the settlement will completely resolve the adversary proceeding and proofs of claims.

Under the settlement, the group has agreed to pay $38 million to Sher, for the benefit of the debtor’s estate.

The parties will also seek dismissal of the adversary proceeding after the payment has been made.

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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