PHILADELPHIA—New Century Financial Corp. and its creditors have filed a bare-bones Chapter 11 plan that does not say how the company plans to pay creditors who have filed $35 billion in claims against it.
Once one of the country's largest subprime lenders, New Century raised only about $235 million by selling assets in its bankruptcy liquidation, according to documents filed Saturday in the U.S. Bankruptcy Court in Wilmington, Del.
Those documents have blanks where New Century is supposed to say how much cash it will have left for creditors at the end of its Chapter 11 case.
In an e-mail Monday, Mark Indelicato, an attorney for New Century's creditors, said New Century is still working to fill in the blanks. Indelicato, who is with the Hahn & Hessen law firm, represents the official committee of unsecured creditors in New Century's bankruptcy.
Those creditors will get a share of the proceeds of any litigation stemming from New Century's collapse, including lawsuits against former leaders and others connected to suspected accounting fraud, according to the Chapter 11 plan documents.
New Century, based in Irvine, Calif., stopped lending and filed for Chapter 11 protection in April 2007, after admitting that financial reports it filed in 2006 were wrong. Later, the company admitted its 2005 accounting was also flawed.
Creditors' attorneys have in the past warned that New Century's case will not have a happy ending for unsecured creditors. That group that includes major Wall Street banks that retrieved some of their investments from New Century before it went under last year.
Units of Credit Suisse First Boston Corp. and Deutsche Bank AG hold seats on the creditors committee, along with Credit-Based Asset Servicing and Securitization, a major issuer, investor and servicer of securities related to subprime mortgages.
New Century's Chapter 11 plan documents say negotiations are underway that could cut the amount of claims filed in the case. Creditors filed $23.7 billion in secured claims and $10.5 billion in unsecured claims.
