Former Thornburg Mortgage's trustee seeks OK of partial settlement

By Jim Witters

Wilmington, Del., April 12 - TMST, Inc. Chapter 11 trustee Joel I. Sher is seeking approval for the transfer of more than $2.25 million from a reserve account to the collateral agent while retaining the right to seek a sale commission in conjunction with a 2008 settlement agreement, according to an April 12 filing with the U.S. Bankruptcy Court for the District of Maryland.

Under the August 2008 settlement, the trustee held $3.33 million as a surcharge reserve, pending the resolution of claims asserted by the trustee.

The surcharge was intended to recover out-of-pocket expenses incurred by the debtors in the preservation and disposition of their servicing portfolio. The reserve was also to fund a trustee commission.

In December 2012, the court approved a partial settlement with respect to the 2008 agreement that included distribution of $666,500 from the surcharge reserve to the debtors' operating account, distribution of $413,319 from the reserve to the collateral agent and the continued reserving of $2.25 million pending further adjudication of the recovery for a sale commission.

Now the trustee is seeking to turn over those remaining funds to the collateral agent for distribution to the counterparties.

The counterparties include: Greenwich Capital Markets, Inc.; Royal Bank of Scotland plc; Greenwich Capital Derivatives Inc.; Bear Stearns Investment Products Inc.; Citigroup Global Markets Ltd.; Credit Suisse Securities (USA) LLC; Credit Suisse International; and UBS Securities LLC.

The trustee also seeks to reserve the right to seek a commission for the $78.9 million sale of the debtors' servicing portfolio.

No hearing has been scheduled to consider the proposed settlement.

TMST, formerly Thornburg Mortgage, is a Santa Fe, N.M.-based lender specializing in jumbo mortgages that filed for bankruptcy on May 1, 2009. Its Chapter 11 case number is 09-17787.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.