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Walter Investment files prepackaged Chapter 11 plan

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Walter Investment files prepackaged Chapter 11 plan

Walter Investment Management Corp. has filed a voluntary Chapter 11 petition in the U.S. Bankruptcy Court for the Southern District of New York to execute a prepackaged financial restructuring plan.

The financial restructuring process is expected to occur in the first quarter of 2018, following which the company expects to have reduced its outstanding corporate debt by approximately $800 million and improved its financial flexibility.

The prepackaged plan incorporates the previously announced agreements the company earlier reached with certain lenders holding term loans under its 2013 credit agreement, and certain holders of its outstanding 7.875% senior unsecured notes due 2021. The company's lenders, senior noteholders and holders of its outstanding 4.50% convertible senior subordinated notes due 2019 voted overwhelmingly to approve the 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.

These actions are intended to reduce Walter's debt, strengthen its balance sheet and better enable it to focus on its business.

In connection with the prepackaged plan and in-court restructuring process, Walter obtained a commitment for warehouse financing guaranteed by Walter, which, subject to court approval, will provide the company, Ditech and Reverse Mortgage with up to $1.9 billion in available warehouse financing that is expected to convert into exit financing in the same amount. Upon the court's approval, the new financing and cash generated from the company's ongoing operations will be used to support the business during the reorganization process.

Weil Gotshal & Manges LLP is acting as legal counsel, Houlihan Lokey is acting as investment banking debt restructuring adviser and Alvarez & Marsal North America LLC is acting as financial adviser to Walter in connection with the financial restructuring.

Kirkland & Ellis LLP is acting as legal counsel and FTI Consulting Inc. is acting as financial adviser to the lenders.

Milbank Tweed Hadley & McCloy LLP is acting as legal counsel and Moelis & Co. LLC is acting as financial adviser to the senior noteholders.