Mortgage originator Stearns Holdings LLC, which filed for Chapter 11 bankruptcy in July, reached an agreement with its largest noteholders to support its modified reorganization plan.
These noteholders own almost two-thirds of the notes' face value.
Parent company Blackstone Group Inc., together with the noteholders' support, will contribute $65 million in new capital plus additional cash to pay certain claims in exchange for entire ownership of the reorganized company. The private equity giant has also agreed to refinance up to $30 million in debtor-in-possession financing under the reorganization plan.
Stearns agreed to cancel an auction set for Sept. 16 upon securing the noteholders' approval. It will seek the U.S. Bankruptcy Court for the Southern District of New York's approval on its reorganization plan at a hearing Oct. 24.
In its bankruptcy filing, the mortgage lender blamed Pacific Investment Management Co. LLC for reportedly being difficult in negotiations as it sought to resolve liquidity challenges and to restructure amid declining origination volumes and revenues.
Skadden Arps Slate Meagher & Flom LLP is Stearns' legal adviser, while PJT Partners is the financial adviser. Alvarez & Marsal is the company's restructuring adviser.
