Mortgage company’s creditors object to filing delay

By Sean F. Driscoll

BusinessRockford.com

Commercial Mortgage & Finance’s creditors are objecting to the company’s request for more time to file a liquidation plan in bankruptcy court, saying the case isn’t complicated enough to warrant a delay.

Federal law gives companies 120 days after their bankruptcy filing to submit a reorganization plan. If they don’t, then other creditors can submit their own plan to the court and force the company to sell assets or shut down.

Last month, Gregory Jordan, a Chicago attorney representing Commercial Mortgage, asked for more time to file a plan. The company’s 120-day period expired Feb. 5, but Jordan’s motion still is pending. 

Brad Koch, an attorney representing the creditors committee, said in an objection filed today that “the business is certainly not large and the liquidation of its assets will not be overly complex.”

A hearing is scheduled on the request at 10:30 a.m. Wednesday in federal court, 211 S. Court St.

Jordan also has objected to motions by Koch asking the court to restrict Commercial Mortgage’s business activities, including preventing it from loaning money to its subsidiary companies. (Read the motions to restrict loans, to impose liens and encumbrances, and to establish a restricted bank account; and read the responses to the motions to restrict loans, to impose liens and encumbrances, and to establish a restricted bank account.)

In the three objections, Jordan said the five-member creditors committee — charged with representing the interests of all 1,400 creditors — is improperly seeking to run the business and doesn’t have the authority to control Commercial Mortgage’s actions.

A hearing on these motions is scheduled for March 5 in federal court.

Commercial Mortgage, which traces its roots back to 1929, sells promissory notes to investors on six- or nine-month terms, offering higher interest rates than a traditional certificate of deposit. Many investors bought multiple notes and continually rolled them over.

The company filed for Chapter 11 bankruptcy protection Oct. 8 after a rash of investors tried to cash out their notes. The investments — which total more than $60 million — were frozen and have remained inaccessible to the company’s creditors.

Commercial Mortgage & Finance Co. does not own CMF Insurance Agency of Rockford.

Reach staff writer Sean F. Driscoll at 815-987-1346 or sdriscoll@rrstar.com.