Attorneys have month to plan for mortgage company's liquidation

By Sean F. Driscoll

BusinessRockford.com

Attorneys for Commercial Mortgage & Finance will have 30 days to work with creditors and form a plan for the bankrupt company’s liquidation, a federal judge ruled today.

Gregory Jordan, a Chicago attorney representing the company, said he had a “very productive” meeting last week with the five-member creditors committee, which is charged with representing the interests of all 1,400 creditors in the case. Jordan originally asked for a three-month extension to file a plan but now believes a month will be sufficient.

If the creditors committee feels negotiations have reached an impasse, however, it can submit its own plan to the court before the 30-day period is up, said Brad Koch, a Rockford attorney representing the committee.

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

The company’s 120-day period expired Feb. 5, but Jordan filed a motion last month to extend that deadline.

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.

Other court news
Also today, Judge Manuel Barbosa approved two motions brought by Commercial Mortgage & Finance:

- To hire Steve Clark and Doyle, Woodhouse & Moore Inc. as commercial real estate brokers for much of Commercial Mortgage’s real estate holdings. According to court documents, the company has more than $12 million in personal property, which it will sell as part of its liquidation proceedings. The firm will receive a 7 percent commission on each property that is sold. (Read the motion here.)

- To hire Whitehead Inc. for the sale of the former Ironwood Golf and Practice Center, 2322 Conger Road, Seward. Whitehead has an undisclosed client interested in buying the property, but Commercial Mortgage will seek other bids in case it can get a better price. If Whitehead’s buyer makes an offer but is overbid, Whitehead still will get a commission on the sale. (Read the motion here.)