American Home to pay fraction of bankruptcy claims

NEW YORK (Reuters) –

American Home Mortgage Investment Corp

(AHMIQ.PK), which was among the largest U.S. home loan

providers before seeking bankruptcy protection a year ago, said

it will pay unsecured creditors no more than 5.9 cents on the

dollar as it liquidates assets.

In a disclosure statement filed Friday with the U.S.

bankruptcy court in Wilmington, Delaware, the company said many

unsecured creditors will recover zero to 2.2 cents on the

dollar on their claims.

Creditors whose claims are backed by collateral will

recover the full amounts owed, it said. Shareholders will get

nothing.

American Home and seven affiliates estimated they had $210

million of cash as of June 30, several court filings show.

The disclosure statement will be mailed to creditors so

they can vote on Melville, New York-based American Home’s

Chapter 11 liquidation plan.

U.S. Bankruptcy Judge Christopher Sontchi must approve the

plan, which American Home also filed with the court.

American Home filed for bankruptcy protection on August 6,

2007 after falling home prices and a surge in borrower defaults

led to major write-downs, prompting margin calls from the

company’s own lenders.

The company’s collapse remains one of the largest since the

nation’s housing slump began. American Home sought protection

four months after similarly-sized subprime lender New Century

Financial Corp filed for protection from its own creditors.

Like IndyMac Bancorp Inc (IDMC.PK), which collapsed last

month, American Home specialized in “Alt-A” mortgages, which

typically went to people with good credit but who did not need

to fully document income or assets.

American Home made about $58.9 billion of home loans to

about 196,000 borrowers in 2006. It sold its loan servicing

business last year to billionaire Wilbur Ross for about $500

million, and has been selling other assets to pay debts.

The company said it now employs 39 people, down from about

7,400 prior to the bankruptcy.

In the disclosure statement, American Home it would likely

convert its case to Chapter 7 if its liquidation plan were not

approved. It said this would cause “substantially diminished”

recoveries for creditors and an “immense waste” of resources.

American Home shares rose 1 cent to 4 cents in morning

trading on the Pink Sheets.

(Editing by Gerald E. McCormick)