Fremont General Files for Bankruptcy

June 19, 2008, 7:30 a.m. EDT 1 Min Read

Fremont General has filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code in a follow-up to regulatory approvals for CapitalSource to buy certain assets and liabilities of Fremont Investment & Loan (FIL), according to a company release.

The California Department of Financial Institutions and the Federal Deposit Insurance Corp. granted approval for CapitalSource, through a newly formed wholly-owned California industrial bank, CapitalSource Bank, to acquire a substantial portion of FILs assets, including all of FILs branches and deposits.

Fremont General intends to promptly file bankruptcy to complete the acquisition of FILs assets and deposits in accordance with federal bankruptcy laws.

Previously, Fremont General sold its $12.2 billion mortgage servicing rights portfolio to Litton Loan Services, a division of Goldman Sachs. Meanwhile, CapitalSource will make a public offering of 30 million shares of common stock.

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