NEW YORK - Small business credit card lender Advanta Corp. has filed for Chapter 11 bankruptcy protection.
Its shares plunged 77 percent yesterday, to 7 cents.
The filing came five months after the company said it was shutting down its credit card lending business in a last-ditch effort to preserve cash as loan losses mounted.
The Spring House, Pa., company said it has nearly $100 million in cash on hand, but that would not be enough to meet its debt obligations. It listed assets of $363 million and debt of $331 million.
Advanta is the holding company of Advanta Bank Corp., which is not included in the bankruptcy filing. The bankruptcy will not have any impact on Advanta Bank’s outstanding credit card balances and customer payments will continue on normal schedules, the company said. Advanta Bank is currently collecting $2.7 billion in outstanding balances from 360,000 customers.
Advanta Bank’s capital levels, however, are below regulatory requirements. The company said it could be shut down by regulators.