April 02, 2007

New Century files for Chapter 11.

I guess we can put this one to rest. No bailout for a company worth $80 million and debt of $8.4 billion.

"NEW YORK (CNNMoney.com) -- New Century Financial Corp. said Monday it will immediately cut 3,200 jobs, or 54 percent of its work force, as part of its Chapter 11 bankruptcy reorganization.

The Irvine, California-based company also said it agreed to sell its servicing assets and platform to Carrington Capital Management LLC for $139 million, subject to bankruptcy approval."


Not going to see this place on Oprah.

New Century article on CNN today

4 Comments:

sed said...

The circle of pain is widening. Lots of bad news tickers today on housing, but spreading to autos and manufacturing. It's really scary since stuff is just beginning to hit the fan.

So what's it gonna be at the Fed? Raise rates to continue the inflation fight and risk causing a deflationary depression or lower rates to create hyperinflation and reduce the value of our saved dollars?

No problem, "we anticipate a slower but positive stock growth this year" say them all on TV.

Anonymous said...

Help me out here.
Chapter 11 means they can still run just with no credit and have to sell off huge portions of the company.

Chapter 7 means they board up the doors and sell the whole thing lock stock and barrel.

Is this correct? If so then NEW CENTURY might come back maybe in the next Century.

sed said...

I think that's right, most "big" companies that want to come back, like some of the airlines, take Chapter 11. Theoretically, this is not the end of New Century, but can you imagine them really coming back? What did they ever do except loan out junk.

Dr Housing Bubble said...

Look at Chapter 11 as a reorganization of the business while Chapter 7 is a going out of business sale.

Considering that they have proposed to cut their workforce in half, I would say they are off to a good start. I mean what is the purpose of account executives if your funding source is now cut off?

They will be bought off by others for pennies on the dollar. They're showing Joe Public how to pick up foreclosures by being a live example.