Ditech returns to bankruptcy to restructure its debt
Ditech Holding Corp. is refiling for bankruptcy almost a year after emerging from it in order to facilitate a restructuring agreement with lenders holding more than 75% of its term loans.
The agreement Ditech came to with these creditors extinguishes more than $800 million of its corporate debt, according to the company.
"To facilitate this financial restructuring, the company filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York," Ditech said in a press release Monday.
The company has received commitments for up to $1.9 billion in debtor-in-possession financing to support its operations during the bankruptcy process. As part of bankruptcy proceedings, it has filed for authorization to continue company operations, and expects to receive that approval.
"Since we completed a recapitalization last February, we have made important progress on our strategic initiatives and our expense management efforts. However, as a result of market challenges that have continued to accelerate and pressure our business, we must take further action," Thomas Marano, president and CEO of Ditech, said in the press release.
"We intend to use this process to restructure our balance sheet and help us meet our obligations. We will continue to evaluate a broad range of options with the goals of maximizing value and creating the best path forward for our business. We are pleased to have the support of our lenders in this process."
"As we move forward, we remain firmly committed to our mission of serving customers through the homeownership journey. I want to think our employees for their continued dedication to serving our customers. Our people will continue to be the driving force behind our success."
Ditech's stock, which had opened at 19 cents per share in the over-the-counter market on Friday, initially trended downward into the high single-digits after the announcement Monday morning. But by 11 a.m., it had begun to rebound.
The company had warned that it might have to refile for bankruptcy in its third-quarter 2018 earnings. It had previously filed for bankruptcy in November 2017 under the name Walter Investment Management.
Last month, the company announced that it had entered a forbearance agreement for a debt payment that had been due in December 2018. It has been exploring the possibility of a sale or other strategic alternative since June of last year.