Prommis Holdings Files for Chapter 11 Bankruptcy

Prommis Holdings Files for Chapter 11 Bankruptcy

03/19/2013 BY: ESTHER CHO

Prommis Holdings Inc., along with 10 of its affiliates, filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court in Delaware.

Bloomberg first reported the story Monday and revealed the company listed debt of more than $50 million and assets of as much as $50 million in the filed documents.

Prommis provides technology-enabled processing services for the default resolution sector of the mortgage industry. The company’s main customers include law firms with large mortgage default resolution practices and some of the largest mortgage servicers. As of the petition date, the document stated the company provides bankruptcy processing and many other services in 17 states.

According to court documents, Atlanta-based Prommis, in consultation with its lenders, decided to commence the Chapter 11 cases to pursue a sale of all or nearly all of their assets and an orderly transition of their employees in an effort to preserve over 710 jobs, or as many jobs as possible. The company would also like to wind-down their businesses through a Chapter 11 plan of liquidation.

Despite aggressive cost-reduction measures in the latter part of 2012, Prommis suffered from a loss of key employees due to uncertainty of the company’s financial health, a reduction in business caused by disputes with key customers, and additional processing requirements imposed by mortgage servicers and investors, according to court documents.

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