Wilmington Trust was appointed as a member of the unsecured creditors’ committee in the bankruptcy of Credit-Based Asset Servicing and Securitization (C-Bass), which filed for chapter 11 on Nov. 12 in the U.S. Bankruptcy Court for the Southern District of New York.
Wilmington Trust is indenture trustee for holders of roughly $234 million of debt issued by C-Bass.
Wilmington Trust has been on the unsecured creditors’ committee for several of the largest corporate bankruptcies in American history, including those of Lehman Brothers Holdings, General Motors Corp., and Washington Mutual.
After the C-Bass' bankruptcy filing, Wilmington Trust released a statement saying that it is not providing credit to C-Bass, as reported by StructuredFinanceNews.com on Nov. 16.
The trustee said, at that time, that there was recent news reports that misleadingly indicated that Wilmington Trust is giving credit to C-Bass. Wilmington denied this 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 at that time.
In other C-Bass-related news, yesterday published reports said that tthe company had won permission to auction its collateral management unit and seek bids worth more than the $2.4 million offered by FIG.
FIG made an offer for that business under a Nov. 9 purchase agreement, the report said. The court paper indicated that this C-Bass unit, according to the report, services 17 privately offered CBOs.
Reports said that U.S. Bankruptcy Judge Allan Gropper in Manhattan approved a sale procedure that required bids to be received before Dec.31 as well as an auction be held on Jan. 10. A $100,000 break-up fee and expense reimbursement, the reports said, will protect the stalking-horse bidder, which is an affiliate of Fortress Investment Group.
C-Bass also won approval of a revised request to use cash collateral on an interim basis in bankruptcy.
According to the report, Andrew Rickert, the subprime buyer's executive vice president, said in court papers that C-Bass used most of its collateral in the 10 months leading up to its bankruptcy to pay down the balance on its senior loans therefore bringing down the amount to $170 million from $1.9 billion. The report said that the remaining collateral included MBS subordinated tranches, whole loans, claims against third parties, furniture and intellectual property, as well as its collateral-management business.
Gropper had originally denied the company’s first request to use $50,000 to $100,000 worth of its lenders’ collateral, the published report indicated. He added that C-Bass had not shown it needed the money as an emergency measure and that an agreement between C-Bass and its lenders must be vetted by a committee representing unsecured creditors, according to the report.