Bankruptcy Judge Mary Walrath granted breast implant maker MediCor Ltd. approval to sell its assets and the assets of some of its nondebtor subsidiaries at an auction next month, Bankruptcy Law360 reported yesterday. Judge Walrath granted MediCor’s motion allowing the sale on Friday, setting bidding procedures and scheduling the auction sale for Sept. 18. Companies that are interested in bidding for MediCor’s assets must submit qualified bids to the company by Sept. 7. The bids, which will be for the single lot including MediCor’s assets and the assets of its subsidiaries, must be at least $50 million and bidders must provide a 10 percent good-faith deposit, Judge Walrath said. Only parties that have submitted qualified bids will be able to take part in the Sept.18 auction, the order said. A hearing has been scheduled for Sept. 24 to approve the sale.

Rising credit card borrowing may be a sign of consumer distress spreading from the subprime mortgage market to other types of lending, Investor’s Business Daily reported on Friday. While defaults among home buyers have spiked, the number of credit card loans in delinquency has been running steady. One possible reason, analysts say, is that troubled first-time homebuyers have been choosing to stay current on credit card payments while walking away from homes on which they put down little upfront money. However, trouble may be brewing in the credit card industry, says Merrill Lynch. It says balances on consumer credit cards jumped at an annual rate of 11 percent in May and June. With two exceptions, that’s the highest rate since the last recession in 2001-02. Merrill Lynch says some distressed homeowners are now turning to credit cards before being forced into foreclosure. It says a run-up in credit card delinquencies is likely in six to 12 months.

Bankruptcy Judge John H. Squires granted bankrupt money manager Sentinel Management Group Inc. its request yesterday to appoint a trustee to oversee the firm’s operations, Bankruptcy Law360 reported yesterday. Sentinel had claimed that a trustee was appropriate after recent legal action from the National Futures Association and the U.S. Securities and Exchange Commission left the company unable to manage operations on its own. Sentinel found that its operations were hampered by the regulator’s document requests. The SEC, which filed suit against Sentinel on Monday, has targeted the company’s explanation of its downfall. In its complaint, the SEC said Sentinel had actually imploded because it mishandled investors’ money in violation of the 1940 Investment Advisor Act.

Wholesale mortgage lender Quality Home Loans became the latest victim of the subprime home loan crisis as it filed for chapter 11 protection on Tuesday, the Associated Press reported yesterday. The company’s voluntary bankruptcy petition, filed in the bankruptcy court in San Fernando Valley, Calif., lists assets in the range of $1 million to $100 million and liabilities of more than $100 million. The Agoura Hills, Calif.-based company does business under the names Clear Credit Capital, Last Chance Home Loans, Last Option Lending and QHL Investments. Three of the company’s affiliates - QHL Holdings Fund Ten LLC, California TD Investments LLC and Golden State TD Investments LLC - also sought chapter 11 protection Tuesday. California TD was listed as Quality Home’s largest creditor, with an $11.1 million claim. Other top creditors include First California Bank, owed $352,468, and Canon Financial Services, owed $293,003.

Delta named Richard H. Anderson, the former head of Northwest and a Delta board member, as its chief executive yesterday, succeeding Gerald Grinstein on Sept. 1, the New York Times reported today. Anderson is returning to the airline industry, where he spent 20 years, after two years as an executive vice president at the UnitedHealth Group. Anderson, a lawyer, spent 14 years at Northwest, where he was chief executive, before leaving in 2004 for UnitedHealth. Previously, he worked for three years at Continental Airlines. He said that there were no plans for his new and old airlines to combine. Instead, Anderson said that Delta would keep pushing to expand internationally and would remain vigilant over its costs and balance sheet, now that it has emerged from bankruptcy protection.

Mortgage brokers, bankers, loan securitizers, ratings agencies, appraisers and loan servicers are warning Congress that any strong steps it may take to correct the current mortgage crisis could shut off mortgages to some people who are trying to purchase homes, CongressDaily reported on Friday. Brokers, who are regulated at the state level, appear to be the industry that will come under the most scrutiny. Senate Banking Chairman Chris Dodd (D-Conn.) has called for a ban on yield spread premium and has said brokers should be required to act either as a fiduciary agent of the borrower or as an agent of the lender. The Mortgage Bankers Association is working against language that would place liability on bankers for loans they make and imposition of a “suitability” standard requiring brokers and lenders to find loans that fit a borrower’s specific financial situation. House Financial Services Chairman Barney Frank (D-Mass.) has said that he does not want to include a strict suitability standard, preferring language that would state that lenders should not make loans that the borrower cannot repay

Stocks in Asia continued their downward spiral today amid the widening fallout from the United States’ subprime mortgage crisis, the New York Times reported today. The decline was led by shares in South Korea, as local investors returned from a national holiday there and joined the stampede by foreign investors trying to sell. The South Korean benchmark stock index suffered its biggest decline in more than five years today, falling nearly 7 percent late in the afternoon in Asia after an initial 10 percent plunge that forced the Korea Exchange to suspend trading for 20 minutes. Australia was also hit today by more repercussions from the credit crisis in the United States. Rams Home Loans Group, a nonbank lender which earlier in the week warned that its earnings could be hurt by rising costs for its United States borrowings, confirmed today that it had been unable to refinance $5 billion in debt.

The volatility of corporate bonds rose after a Merrill Lynch & Co. analyst said that Countrywide Financial Corp., the biggest U.S. mortgage lender, may have to file for bankruptcy, Bloomberg News reported yesterday. Credit-default swaps on Countrywide widened after Merrill Lynch analyst Kenneth Bruce raised the possibility that a loss of access to short-term loan markets could force Countrywide into bankruptcy. Contract prices for mortgage lender Residential Capital LLC and for home-loan insurer Radian Group Inc. are also trading as if investors see a high probability of default. Deutsche Bank AG and Barclays Plc and other banks refused to provide emergency loans for 17 Canadian finance companies managing funds of C$27 billion ($25.3 billion) after the firms failed to sell asset-backed commercial paper to repay maturing debt. The Canadian issuers may default if they can’t raise the money elsewhere, ratings company DBRS in Toronto said yesterday.
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JPMorgan Chase Bank NA, a secured creditor of bankrupt mortgage lender HomeBanc Corp., has asked the court for assurance that its claim of more than $67 million will be repaid, Bankruptcy Law360 reported yesterday. JPMorgan sought adequate protection of its assets or, in the alternative, relief from the automatic stay to pursue a foreclosure of the amount owed. The bank wants to stop HomeBanc from dipping into cash collateral in order to run its business post-petition. According to the motion, JPMorgan entered into a loan agreement with HomeBanc in November 2006, under which the bank gave the lender $75 million in return for certain collateral. JPMorgan said that about $67 million of the principal amount of the loan, plus interest, expenses and fees, remains to be repaid by HomeBanc.
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Regional mortgage lender HomeBanc Corp. has filed for bankruptcy protection, the latest casualty of a housing market that continues to weaken, the Associated Press reported on Friday. The Atlanta-based company filed its chapter 11 petition dated Thursday in the U.S. Bankruptcy Court for the District of Delaware. In the filing, the company listed estimated assets and liabilities of more than $100 million each. A list of creditors holding the largest unsecured claims against HomeBanc included JP Morgan Chase Bank, KeyBank, Commerzbank, US Bank and French bank BNP Paribas, which earlier this week froze three investment funds heavily invested in securities backed by subprime mortgages.

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