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Judge won't oust lender's managers

Wall Street Roundup

May 16, 2007|From Times Staff and Wire Reports

The judge overseeing the bankruptcy of New Century Financial Corp. on Tuesday rejected the U.S. government's attempt to oust the former sub-prime mortgage lender's management and replace it with a court-appointed trustee.

But U.S. Bankruptcy Judge Kevin Carey, who ruled in Wilmington, Del., indicated a willingness to appoint an examiner to review New Century's accounting for 2006.

The regional U.S. trustee's office, part of a Justice Department unit that acts as a watchdog in bankruptcy cases, had urged Carey to name a trustee, saying management had failed to ensure proper accounting and internal controls.

Representatives of New Century and the U.S. trustee's office couldn't be reached for comment.

Irvine-based New Century was one of the largest U.S. providers of home loans to people with bad credit before it collapsed. The company sought protection from creditors April 2 and has since fired about 5,200 of its 6,200 employees.

A hedge fund, Carrington Capital Management, has offered $133 million for New Century's loan-servicing unit, which handles collections. The unit is New Century's last major asset for sale. The company failed to find a buyer for its lending unit.

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