Walter Investment files prepackaged Chapter 11 plan
Walter Investment announced that, as expected, the company filed a voluntary chapter 11 petition in the United States Bankruptcy Court for the Southern District of New York to execute a prepackaged financial restructuring plan. At the conclusion of the financial restructuring process, which is expected to occur in the first quarter of 2018, the company expects that it will have reduced its outstanding corporate debt by approximately $800M and enhanced its financial flexibility. The Prepackaged Plan incorporates the previously announced agreements the company reached with certain lenders holding term loans under the Company's Amended and Restated Credit Agreement, dated as of December 19, 2013 and certain holders of its outstanding 7.875% Senior Unsecured Notes due 2021. The company's Lenders, Senior Noteholders and holders of the company's outstanding 4.50% Convertible Senior Subordinated Notes due 2019 that voted in the recently completed solicitation of the Prepackaged Plan have voted overwhelmingly to approve the Prepackaged Plan, with 100.00% of the Lenders, 99.24% of the Senior Noteholders and 99.99% of Convertible Noteholders voting to approve the Prepackaged Plan. Walter's operating entities, including Ditech Financial LLC and Reverse Mortgage Solutions, Inc., are not expected to file for chapter 11 and are expected to continue their operations in the ordinary course. The actions taken today are intended to reduce the company's debt, strengthen its balance sheet and better enable Walter to focus on its business, including the growth of its origination and servicing businesses, new technology, innovation, and other areas that are critical to the company's success. The company remains strongly committed to serving its customers by enabling their dreams of homeownership and caring for them throughout their homeownership lifecycle. In connection with the Prepackaged Plan and in-court restructuring process, and as previously disclosed, the company has obtained a commitment for warehouse financing guaranteed by Walter, which, subject to Court approval, will provide the company, Ditech and RMS with up to $1.9B in available warehouse financing that is expected to convert into exit financing in the same amount. Upon approval by the Court, the new financing and cash generated from the company's ongoing operations will be used to support the business during the reorganization process. The company has filed a number of customary motions seeking court authorization to continue to support its business operations during the in-court restructuring process, including the continued payment of employee wages and benefits without interruption. The company expects to receive court approval for these requests. The company and its operating subsidiaries, including Ditech and RMS, intend to honor their obligations to suppliers in full in the ordinary course for goods and services provided.