C-BASS filed for Chapter 11 bankruptcy protection last Friday in the U.S. Bankruptcy Court in Manhattan. The failed firm is an issuer, servicer and investor in subprime RMBS.

The company listed assets worth between $10 million and $50 million and debt of over $1 billion, according to published reports. 

It also declared that it had between 100 and 200 creditors. Additionally, seven of the subprime investor's affiliates sought bankruptcy protection as well.

Milwaukee-based MGIC Investment Corp. and competitor Philadelphia-based Radian Group each hold a 45.5% in C-BASS.

The subprime mortgage company has been liquidating its portfolio since 2007 when it sold its Litton Loan Servicing unit to Goldman Sachs and exited securitization.

At the same time, C-BASS is part of a class-action lawsuit against MGIC for violating federal securities law, reports said. 

MGIC has said in an October regulatory filing that, together with Radian, the Securities and Exchange Commission has been investigating the company over its investments in C-BASS, published reports indicated. 

Meanwhile, trustee Wilmington Trust said in a press release that it is not providing credit to C-BASS.

According to Wilmington, recent news reports have misleadingly indicated that Wilmington Trust is giving credit to C-BASS. Wilmington denied this in the said release despite C-BASS' bankruptcy filing’s listing of Wilmington Trust as among its largest unsecured creditors. 

Wilmington in the statement clarified that it is serving as an indenture trustee for holders of around $234 million of C-BASS-issued debt.  It also reiterated that it has no credit exposure to C-BASS or any of its subsidiaries. Via its corporate client services business, Wilmington is paid a fee for providing these services.

The bankruptcy filing of C-BASS has "no effect on Wilmington Trust’s balance sheet, credit quality, or financial condition," the firm said in the release.







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