Aegis Mortgage files for bankruptcy

HOUSTON - Aegis Mortgage Corp., which last week stopped making new loans and laid off a substantial portion of its staff, has filed for Chapter 11 bankruptcy protection.

The company, whose owners include the private-equity firm Cerberus Capital Management L.P., made the filing Monday in Delaware. It said the action was necessary "to address financial challenges resulting from the recent extraordinary decline in conditions in the secondary mortgage market and national real estate market."

In its filing, Aegis said Morgan Stanley, its largest unsecured creditor, was owed nearly $16 million. It listed 34 other unsecured claims, ranging from $14.2 million to $71,220. Among the other creditors were the Goldman Sachs Group Inc., Deutsche Bank AG, and Merrill Lynch & Co. Inc. They are owed $8 million, $1.3 million and $301,637, respectively, according to the filing.

In court papers, Aegis - once one of the 30 largest U.S. home lenders - said its estimated number of creditors was between 1,000 and 5,000. It estimated both its assets and liabilities at more than $100 million.

Aegis said Aug. 6 that it had stopped taking new loan applications. A day later, it said it had laid off a "substantial" number of its 1,300 workers.

"We are working to wind down our business affairs as expeditiously as possible, with the goal of preserving Aegis' value for the benefit of all parties concerned," Dan Gilbert, Aegis' chief executive officer, said in a statement. "We're deeply disappointed that the rapid decline in market conditions compelled us to take this action."

Aegis' bankruptcy filing follows by a week a filing by American Home Mortgage Investment Corp., the nation's 10th-largest mortgage lender.

Falling home prices and a spike in payment defaults have created turmoil in the mortgage industry. Lenders are closing their doors and failing to meet commitments to fund loans.

Aegis said it continued to maintain its loan-servicing business.