In a worst case scenario investors in bonds issued by The PMI Group could lose upwards of $737 million because the notes are considered "unsecured" according to court papers issued in the mortgage insurer's bankruptcy filing.
In court papers the trustee of the bonds is listed as The Bank of New York Mellon. The investors are not named but could include between 200 to 999 companies and individuals, according to court papers.
The unsecured bonds include four offerings: $285 million, $250 million, $150 million, and $52 million.
Measured by policies-in-force, PMI is the nation's second largest mortgage insurer with $121 billion of coverage at mid-year.
The California-based MI filed for chapter 11 bankruptcy protection last week, listing assets of $100 million to $500 million, and liabilities of $500 million to $1 billion.
The motion covers the parent company but not any of its subsidiaries.
Upon filing for Ch. 11, $685 million of senior unsecured notes and approximately $51.5 million of junior subordinated unsecured notes became due and payable, but the noteholders' ability to seek remedies and enforce their rights has been stayed as a result of the bankruptcy filing. The court documents were provided to National Mortgage News by Bankruptcy.com.
