FGMC Files For Chapter 11 Bankruptcy Protection
Summary
FGMC said the filing is intended to protect the business while “exploring all available restructuring options.” The company said it has begun notifying its regulators and other pertinent parties. FGMC is finalizing debtor-in-possession financing that will enable it to close and fund approved consumer loans, under existing terms and conditions. “While we have made considerable efforts to address our ongoing financial challenges related to the state of the mortgage market, we ultimately must do what is best for our borrowers and consumers,” said Aaron Samples, chief executive officer of FGMC. We are requesting that the court approve a variety of motions that will promote a smooth transition for all pertinent parties while also preserving value for the benefit of the Company’s stakeholders.” FGMC said the chapter 11 filing was necessitated by significant operating losses and cash flow challenges experienced by the company due to “unforeseen historical adverse market conditions for the mortgage-lending industry, including unanticipated market volatility.” It said the “sharp and unexpected decline” in performance reflects the intense pressure on mortgage originations due to the “dramatic collapse of the mortgage refinance market and the weakening mortgage purchase market, which has suffered from a lack of housing inventory and increasing affordability issues.” “These factors have resulted in significant losses on the company’s total mortgage revenues and overall liquidity constraints,” FGMC said. The company added that federal law prohibits it from paying amounts owed from obligations arising prior to the June 30, 2022, filing date, without a court order.