Blackstone-backed mortgage lender Stearns files for bankruptcy

Restructuring deal will wipe out $184 million in bond debt

National /
Jul.July 09, 2019 11:30 AM
Blackstone President and COO Jonathan Gray and Stearns Lending CEO David Schneider (Credit: Getty Images)

Blackstone President and COO Jonathan Gray and Stearns Lending CEO David Schneider (Credit: Getty Images)

Stearns Holdings, the parent company of residential mortgage lender Stearns Lending, filed for Chapter 11 protection Tuesday morning after agreeing on a debt-restructuring plan with majority owner Blackstone Group.

The restructuring will erase $184 million in outstanding bond debt from the California-based firm’s balance sheet, the Wall Street Journal reported. Stearns is also seeking court authorization to continue normal business operations during the bankruptcy process, including the payment of suppliers and vendors, and salaries and benefits for about 2,700 employees.

Blackstone acquired a majority stake Stearns Holdings in 2015. The financial firm is providing $60 million in new money for the restructuring, as well as a bankruptcy loan of up to $35 million to help the lender continue operations. Warehouse lenders have committed $1.5 billion to the plan.

Stearns’ $184 million in outstanding bonds are due to mature next August. The company paid down some of its bond debt last year by selling off most of its mortgage-servicing rights. In its Chapter 11 filing, it listed assets and liabilities each between $1 billion and $10 billion.

Mortgage rates tumbled in recent months after the Fed held off on raising interest rates further. A preceding period of rising rates had cut into Stearns’ lending business. [WSJ] — Kevin Sun


Related Articles

arrow_forward_ios
Ministerial Privilege: Would Tony Blair’s transfer tax loophole work in the U.S.?
Ministerial Privilege: Would Tony Blair’s transfer tax loophole work in the U.S.?
Ministerial Privilege: Would Tony Blair’s transfer tax loophole work in the U.S.?
Redwood Estates in Thorton, Colorado and Brookfield Asset Management's Bruce Flatt. (Bayshore Home Sales, Brookfield)
Brookfield snags $2B refi for massive mobile home portfolio
Brookfield snags $2B refi for massive mobile home portfolio
Overall, mortgage credit availability is at its lowest level since 2014. (iStock)
Mortgage lenders play hard-to-get
Mortgage lenders play hard-to-get
Blackstone CEO Stephen Schwarzman, and Starwood CEO Barry Sternlicht (Getty)
Blackstone, Starwood strike $6B deal for Extended Stay America
Blackstone, Starwood strike $6B deal for Extended Stay America
Acore Partner Warren de Haan. (Acore, Getty)
Acore Capital raises $1B to provide rescue cash to hotels
Acore Capital raises $1B to provide rescue cash to hotels
Bank of America CEO Brian Moynihan (Photo via Getty/iStock/Illustration by Kevin Rebong for The Real Deal)
Bank of America puts $10B toward affordable homeownership
Bank of America puts $10B toward affordable homeownership
Cadre CEO Ryan Williams (Getty, iStock)
Cadre launches fund targeting small real estate investors
Cadre launches fund targeting small real estate investors
Mall owners saw dramatic gains before equally dramatic losses. (Macerich, Getty)
Stock market madness: Macerich soars, sinks, and ends up worse off
Stock market madness: Macerich soars, sinks, and ends up worse off
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...