Delta Financial Corp., Woodbury, N.Y., says it will file for bankruptcy protection after being unable to successfully securitize a mortgage loan portfolio.The securitization was key to the company's completion of a recapitalization (through the issuance of notes and common stock to an affiliate of Angelo, Gordon & Co.) that was announced on Nov. 15. At the same time, Delta had negotiated a standstill agreement with three of its warehouse providers. But because Delta could not do the securitization, the company's warehouse lenders notified the company that events of default had occurred. This subjected Delta to acceleration clauses under agreements making it subject to substantial payment obligations and causing it to incur cross-default claims from other creditors. The next domino to fall was the agreement with Angelo Gordon. Delta said it does not believe it can continue as a going concern, and it has suspended taking new mortgage loan applications. Delta said it is in discussions with parties interested in acquiring assets or operations in conjunction with a bankruptcy proceeding. But it added a disclaimer that the discussions are preliminary and no assurance can be given that a transaction will be completed. Delta can be found online at http://www.deltafinancial.com.
