Tuesday, February 26, 2008

$50 Million!

First NLC's bankruptcy lists more than $50 million in debt

First NLC Financial Services LLC, a subprime mortgage lender that moved hundreds of jobs from Deerfield Beach to Boca Raton just a year ago, has filed for Chapter 11 bankruptcy protection.

The parent company, Arlington, Va.-based investment bank Friedman, Billings, Ramsey Group (NYSE: FBR) said First NLC would liquidate its assets due to continued deterioration in the subprime market.

Such weakness has caused numerous local and national lenders, both in the subprime and prime categories, to exit the business.

First NLC's Chapter 11 filing was made in the U.S. Bankruptcy Court for the Southern District of Florida, West Palm Beach division on Jan. 18. The filing listed more than $50 million in debt and hundreds of creditors.

The top unsecured creditors are Goldman Sachs Mortgage Co., HSBC Mortgage Services, Deutsch Bank Securities and U.S. Bank Corporate Trust Services.

Miami law firm Berger Singerman is representing the debtor, including attorneys Arthur Spector, Paul Avron and Paul Singerman. The U.S. trustee is Heidi Feinman in Miami.
The company also announced on Jan. 11 that it would not close on the pending sale of First NLC to Boca Raton-based Sun Capital Partners.

Following the filing, the Web site for First NLC carried a simple statement: "Due to conditions beyond our control, effective immediately, we are no longer taking applications. Those loans where closing documents have been executed will be funded in the normal manner."
FBR Group signed an agreement in July with an affiliate of Sun Capital for a $75 million recapitalization of First NLC. That deal would have resulted in a reduction of FBR Group's ownership in First NLC to 20 percent.

FBR Group said that, in connection with the Chapter 11 filing, it does not expect to recover its remaining $12 million investment in First NLC.

Founded in 1987, First NLC had 2,100 employees in 70 branches nationwide in 2006. The company continued expanding its mortgage sales, even as the real estate market slowed in early 2006.

In November 2006, First NLC moved corporate headquarters and 450 jobs from three buildings on Hillsboro Boulevard to the Boca Corporate Center and Campus, formerly known as T-Rex. At that point, First NLC said it would add 200 more jobs.

In early August, First NLC laid off half its employees. At the time, Andrew Henschel, the company's VP of corporate governance, said he did not anticipate any more layoffs, and that the company plans to "vigorously compete" in the market.

2 comments:

Baron Womb said...
This comment has been removed by the author.
Baron Womb said...

It appears that the Henschels were not the only crooks behind this disaster. This just posted online on FBR - it seems that after losing millions of dollars these last few years (mostly due to FNLC), these crooks decided to give themselves a big, fat pay raise this week! I feel terrible for the FBR shareholders....


The Committee concluded that management's actions were materially beneficial to the Company and therefore that, in recognition of their efforts and achievements, certain members of executive management should receive bonuses in excess of the bonuses to which they would have been entitled based on the performance goals established in early 2007. The Committee reported its conclusions and recommendations to the Board of Directors, and the independent members of the Board approved the Committee's recommendations. These actions are described below. In addition, the Compensation Committee of the Board of Directors, and the independent members of the Board of Directors, of FBCM also took action on February 21, 2008, to approve executive compensation arrangements for 2008 for its executive officers. Please refer to the current report on Form 8-K filed with the SEC today by FBCM for information regarding those actions.

2007 Performance Bonuses. The Board approved final bonuses for 2007 for its named executive officers as follows: (i) a $2,475,914 bonus payable to Eric F. Billings, Chairman of the Board and Chief Executive Officer, of which $1,778,470 was payable in cash and $697,444 was payable in the form of a combination of FBR Group common stock and FBCM common stock, (ii) a $5,398,835 bonus payable to J. Rock Tonkel, Jr., President and Chief Operating Officer of the Company, of which $5,004,798 was payable in cash and $394,037 was payable in the form of FBR Group common stock, (iii) a $1,494,725 bonus payable to Richard J. Hendrix, President and Chief Operating Officer of FBCM, of which $1,073,672 was payable in cash and $421,053 was payable in the form of FBCM common stock, (iv) a $905,598 bonus payable to William J. Ginivan, Executive Vice President and Chief Legal Officer of the Company, of which $650,496 was payable in cash and $255,102 was payable in the form of acombination of FBR Group common stock and FBCM common stock, and (v) a $801,187 bonus payable to Kurt R. Harrington, Executive Vice President and Chief Financial Officer of the Company, of which $575,496 was payable in cash and $225,691 was payable in the form of a combination of FBR Group common stock and FBCM common stock.