Reverse Mortgage Investment Trust to Restructure and Conduct Orderly Transition of Assets
BLOOMFIELD, N.J., Nov. 30, 2022
BLOOMFIELD, N.J., Nov. 30, 2022 /PRNewswire/ -- Reverse Mortgage Investment Trust Inc. ("RMIT" or "the Company") and certain of its subsidiaries today announced that the Company has filed for protection under Chapter 11 of the U.S. Bankruptcy Code in the District of Delaware as it seeks to preserve value and monetize its assets.
The Company is in ongoing, productive discussions with its Mortgage Servicing Rights (MSR) secured lender and other industry players, including Ginnie Mae, to achieve an agreement that ensures a smooth landing for the Company's servicing portfolio, as well as other obligations. In the meantime, RMIT has already begun work to transfer the remaining loans in its pipeline to other lenders in order to support seniors looking to unlock value in their homes.
The Company made this decision after weeks of negotiations with its constituents, and has begun notifying its borrowers, regulators, and other pertinent parties. RMIT and the broader mortgage industry are facing a number of adverse trends, in particular unprecedented interest rate hikes combined with credit spread widening and overall volatility in fixed income markets, including agency mortgage markets. The market disruption has increased capital requirements to originate and finance new loans and support the Company's servicing portfolio, which severely strained RMIT's liquidity position and depleted the Company's book value. In line with these trends, earlier this month, the Company made the difficult but necessary decision to pause all origination activities, and most recently, conducted a reduction in force.
To fund and support the Company's operations during the Chapter 11 process, the Company is in the process of securing debtor-in-possession (DIP) financing from critical financial stakeholders. The contemplated DIP financing would provide RMIT with near-term liquidity to operate and cover administrative expenses as it pursues restructuring options, once approved by the Bankruptcy Court.
In conjunction with the Chapter 11 filing, the Company will file a number of customary first day motions with the Bankruptcy Court. These motions will enable the Company to preserve the value of its assets for its stakeholders and minimize business disruption during the process. Under Federal law, the Company and its filing affiliates are prohibited from paying amounts owed for obligations arising prior to today's date without a court order. Court filings and information about the claims process are available at https://cases.ra.kroll.com/RMIT.
The Company is supported by Sidley Austin LLP, Bradley Arant Boult Cummings LLP, and Benesch, Friedlander, Coplan & Aronoff LLP as legal counsel and FTI Consulting as financial advisor.
This press release (including information incorporated or deemed incorporated by reference herein) contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those involving future events and future results that are based on current expectations, estimates, forecasts, and projections as well as the current beliefs and assumptions of the Company's management. Words such as, but not limited to, "guidance," "outlook," "believes," "expects," "appears," "may," "will," "should," "intend," "target," "projects," "estimates," "plans," "forecast," "is likely to," "anticipates," or the negative thereof or comparable terminology, are intended to identify such forward looking statements. Any statement that is not a historical fact and other estimates, projections, future trends and the outcome of events that have not yet occurred referenced in this press release, is a forward-looking statement.
Forward-looking statements are only predictions and are subject to significant risks, uncertainties and assumptions that are difficult to predict. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. Forward-looking statements used in this press release include, but are not limited to, statements regarding the Company's expectations regarding its Chapter 11 case and the Company's ability to preserve value, the accuracy of which are necessarily subject to risks and uncertainties that may cause the Company's actual results to differ materially and adversely from the statements contained herein. Some of the potential risks and uncertainties that could cause actual results to differ materially and adversely from anticipated results include, but are not limited to: potential adverse effects of the Chapter 11 cases on the Company's liquidity and results of operations; the Company's ability to obtain timely approval by the bankruptcy court with respect to the motions filed in the Chapter 11 cases; objections to the Chapter 11 cases or other pleadings filed that could protract the Chapter 11 cases; employee attrition and the Company's ability to retain senior management and other key personnel due to the distractions and uncertainties; the Company's ability to comply with the restrictions imposed by certain financing arrangements; the Company's ability to maintain relationships with suppliers, customers, employees, and other third parties and regulatory authorities as a result of the Chapter 11 filing; the effects of the Chapter 11 cases on the Company and on the interests of various constituents; the bankruptcy court's rulings in the Chapter 11 cases, including the outcome of the Chapter 11 cases generally; the length of time that the Company will operate under Chapter 11 protection and the continued availability of operating capital during the pendency of the Chapter 11 cases; risks associated with third party motions in the Chapter 11 cases, which may interfere with the Company's ability to consummate a chapter 11 plan; increased administrative and legal costs related to the Chapter 11 process; potential delays in the Chapter 11 process due to the effects of the COVID-19 virus; and other litigation and inherent risks involved in a bankruptcy process. Undue reliance should not be placed upon the forward-looking statements contained in this press release, which speak only as of the date of this press release. The Company undertakes no obligation to update any forward-looking statements contained in this press release to reflect new information, events or circumstances after the date they are made, or to reflect the occurrence of unanticipated events.
SOURCE Reverse Mortgage Investment Trust Inc.