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Friday, Aug 19, 2022

Fremont Files For Chapter 11 Protection

Fremont General Corp., once one of the largest subprime mortgage lenders in the country, filed for Chapter 11 bankruptcy protection Wednesday.

Fremont asked a bankruptcy court’s permission to sell a “substantial portion” of its assets to CapitalSource Inc. Last week, California regulators gave approval to Chevy Chase, Md.-based CapitalSource to buy Fremont’s retail banking operation. Fremont said in May that it might be forced to file for bankruptcy in order to help the deal go through.

Fremont agreed in April to sell its retail assets to CapitalSource for $58 million in cash plus a 2 percent premium for CapitalSource to get $5.6 billion in deposits. CapitalSource also agreed to loan Fremont as much as $200 million to help insure the transaction was approved.

When the deal is completed, CapitalSource will take over all 22 of Fremont’s retail bank locations in Southern California and will name them CapitalSource Bank.

In its Chapter 11 filing, Fremont, formerly based in Santa Monica and now in Brea, listed $321 million in debts, $643 million in assets and up to 999 creditors.

Last year, Fremont was hit by rising loan delinquencies and was forced by the FDIC to stop making subprime loans.

Fremont’s subsidiary, Fremont Investment & Loan, has not filed for bankruptcy and will continue to operate, the company said.

Shares in Fremont closed down 11 percent to 6 cents per share in trading Wednesday.


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