Mortgage & Realty Trust May Face New Chapter 11

Mortgage & Realty Trust said it might have to re-enter bankruptcy court unless the holders of $329 million of its debt agree to restructure that debt.

The real estate investment trust, with executive offices in Burbank and Elkins Park, Pa., is asking the debt holders to approve the restructuring because Mortgage & Realty missed a $37.8-million principal payment on the debt a week ago. The trust did make a $6.6-million interest payment, however.

Mortgage & Realty said that, so far, none of the debt holders have voted against the restructuring. But the trust said that if it does not get 100% approval, it might have to file under Chapter 11 of the U.S. bankruptcy laws to achieve the restructuring.

Under Chapter 11, a company continues operating and is shielded from creditors’ lawsuit while it devises a plan to pay its debts.

The trust only emerged from Chapter 11 in February, 1991, after a 10-month reorganization. Both that reorganization and Mortgage and Realty’s current problems reflect the continued weakness in the commercial real estate market, which has eroded the trust’s investments.