A bankruptcy judge Thursday approved a bid by New Century Financial Corp. to secure as much as $150 million in interim financing so that the once highflying sub-prime mortgage lender could continue operating.
In his ruling, U.S. Bankruptcy Judge Kevin J. Carey granted the company’s request to take on the debtor-in-possession loan from CIT Group Inc. and Greenwich Capital Financial Products Inc.
New Century on Monday filed for Chapter 11 protection in U.S. Bankruptcy Court for the District of Delaware.
The Irvine-based company was the second-largest provider of home loans to high-risk borrowers, but it fell on hard times amid a surge in mortgage defaults caused by borrowers unable to make payments.
As part of the company’s reorganization process, it has agreed to sell its loan servicing business to Carrington Capital Management and its affiliate for about $139 million, subject to bankruptcy court approval.
New Century has also agreed to sell certain loans and residual interest in some trusts to Greenwich Capital for $50 million.