But one of its creditors is seeking to reverse the move
A court-ordered receiver for American Equity Mortgage has begun looking into new revenue streams to pay off the lender’s debt, which totals $1.2 million and is held by more than 40 creditors, according to a report by the St. Louis Post-Dispatch.
However, one of its creditors is asking the court to vacate its decision. While American Equity actually shut down at the end of last year, it only requested the receivership in June. The request is unusual given that the creditors usually request receivership. The company now operates under the legal name NFGM Inc.
“The business of mortgages has changed in so many ways since the internet, and it changed the way people shopped for mortgages,” said bankruptcy lawyer Mike Becker, who is acting as the company’s receiver. “It appears American Equity Mortgage didn’t make the investments needed to adapt to that changing environment.”
According to court documents, American Equity’s creditors included CitiMortgage ($479,954), Dell Financial Services ($129,701), and Double Positive ($78,610), among others.
Earlier in August, CitiMortgage challenged the company’s receivership.
“Receivership has been established as a creditor’s remedy in equity for more than 100 years,” CitiMortgage said in a court filing. “A debtor that wishes to obtain protection from its creditors has a straightforward remedy under federal law: a voluntary petition under Chapter 7 of the federal Bankruptcy Code. That, of course, requires the debtor to make detailed disclosures under oath about its finances.
“It is understandable that NFGM would attempt to avoid this sort of scrutiny of its finances and transactions, but the (Missouri Commercial Receivership Act) does not permit the relief that NFGM requests,” CitiMortgage said.
