The Commercial Financial Services debacle may be nearing a resolution with the announcement that a newly formed company, Worldwide Asset Management, has agreed in principle to buy CFS for $16.5 million in cash.
CFS spokeswoman Sharon Price said the agreement requires the approval of the U.S. Bankruptcy Court in Tulsa, Okla., where the company's Chapter 11 filing was made.
Price said the company, whose asset-backed bonds have fallen on hard times, will be working over the next 30 days to enlist support for the purchase from its securitized debt holders and other creditors. A court hearing is expected to be held in July on the proposed buyout. If approved, an auction will be held to sell the company to Worldwide or another higher bidder.
Following the auction, Price said, there will be a period of 10 days to two weeks for the sale to close and CFS will then belong to its new owner.
She noted however that the sale of CFS itself does not yet resolve the bankruptcy affecting the outstanding debt issues and creditors. The proceeds of the sale of CFS will be used with other available assets to continue negotiations with all the creditors to resolve the financial issues that will continue after the sale of the actual operating company.
CFS is expected to keep most of the remaining 1,500 employees for the reorganized business, if the sale is approved. Prior to the bankruptcy filing and subsequent layoffs, the company employed some 3,000 workers in Tulsa and another 700 in Oklahoma City.
The company's problems surfaced following an anonymous letter claiming financial improprieties, which led credit rating agencies to pull their ratings of CFS' asset-backed securities.
Worldwide Asset was created for the purpose of acquiring CFS and is owned in part by Atlanta entrepreneur Frank J. Hanna Jr., the company reported.
- David Feldheim