USA Commercial Mortgage files Chapter 11, seeks $100 million DIP facility

By Caroline Salls

Pittsburgh, April 17 - USA Commercial Mortgage Co. filed for Chapter 11 bankruptcy Thursday in the U.S. Bankruptcy Court for the District of Nevada to address liquidity needs and debt restructuring, according to a company news release.

The company also does business under the name USA Capital.

In connection with the Chapter 11 filing, USA Commercial Mortgage said it is seeking up to $100 million in debtor-in-possession financing to fund operations and provide capacity to fund new loans.

According to court documents, the company has $50 million to $100 million in assets and $10 million to $50 million in debt.

USA Commercial Mortgage's largest unsecured creditors include Dell Bunch, Las Vegas, with a $10.5 million claim and Michael Peterson, Las Vegas, with a $1.5 million claim.

The company said it has retained Mesirow Financial Interim Management to assist in reorganizing operations and securing DIP financing in order to rebuild the company's core loan origination, underwriting and servicing operations.

Thomas J. Allison, Mesirow executive vice president and senior managing director, has been named chief executive officer for USA Commercial Mortgage during the reorganization process.

Allison replaces Joseph D. Milanowski, who had been president, chief operating officer and a director of USA Commercial Mortgage since 1998 and had been associated with the company since 1993.

"We are entering into this process with a solid plan," Allison said in the release.

"We are working on liquidity to fund our commitments and to improve our collection process. What we need is time to get our investor accounts and loans back in order and to put the systems and processes in place to enable the company to operate properly on a going-forward basis."

USA Commercial Mortgage filed several first-day motions with the court to ensure that the company is able to pay its employee wages and benefits, suppliers, investors and borrowers; obtain interim financing; maintain cash management programs and, retain legal, financial and other professionals to support its reorganization plans.

In addition, the release said debtor USA Capital First Trust Deed Fund, LLC is the subject of a Securities and Exchange Commission investigation of its operations.

USA Capital First Trust Deed Fund's manager, USA Securities, LLC and USA Commercial Mortgage are also being investigated.

The company said that Allison, as the new CEO, is conducting his own investigation of the concerns raised by the SEC.

The company is a Las Vegas privately held real estate lender. Its Chapter 11 case number is 06-10725.

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