Columbia, Md.-based furniture company Scan International Inc. has filed for chapter 11 bankruptcy protection, citing declining revenue and an inability to borrow money, the Baltimore Business Journal reported yesterday. The company sells contemporary furniture in five retail locations in the Washington, D.C. and Baltimore areas. Revenue at the company dropped from $25 million to $17 million from 2005 to 2007, according to court papers filed Wednesday in U.S. Bankruptcy Court in Baltimore. Scan officials attribute the decrease partly to “the decline in the housing market and the loss of business as a result of other furniture retailers ceasing operation and liquidating inventories at deep discounts.” The revenue drop made it difficult for Scan to borrow money from its bank, Wells Fargo, and made it challenging for Scan executives to purchase inventory for retail sales, the filing shows. Scan listed about $100 million each in assets and liabilities.

Bankruptcy Judge Christopher Sontchi approved American Home Mortgage Investment Corp.’s extension request until March 3 to file a chapter 11 plan detailing how it plans to pay creditors, the Associated Press reported yesterday. Melville, N.Y.-based American Home filed for chapter 11 protection in August, after being overwhelmed with margin calls triggered by the melting mortgage market. The company asked Judge Sontchi to delay the chapter 11 plan filing deadline so that it could finish its liquidation and start negotiations with creditors. Most of American Home’s servicing business, a portfolio of about $40 billion worth of home loans, is being sold to W.L. Ross & Co. in a deal worth from $450 million to $500 million.

A Chicago lawyer was accused yesterday of violating federal securities laws by misleading investors who lost more than $1 billion in the financial downfall of the commodities brokerage powerhouse Refco, the Associated Press reported yesterday. Joseph P. Collins, a partner with Mayer Brown, was charged in a criminal indictment with conspiracy to commit securities fraud, wire fraud, bank fraud, money laundering and with filing false documents with federal securities regulators. Collins was Refco’s primary outside lawyer from 1994-2004 and continued to work for Refco until October 2005, the SEC said. The indictment said Collins’s law firm charged the company more than $40 million in fees from 1997-2005.

The Federal Reserve proposed new rules that would sharply curtail the kinds of high-risk mortgages largely responsible for the global credit crunch, but the proposal drew a lukewarm, and occasionally hostile, reaction from lawmakers and other critics, who called for more aggressive action, the Wall Street Journal reported today. Lawmakers pounced on the central bank for having failed to act before the current wave of home foreclosures and for not seeking bigger changes in mortgage-industry practices. They noted the Fed’s proposal comes too late to help many homeowners, and that it addresses a market for risky mortgages (or subprime home loans) that has largely dried up. One big test of the Fed’s overall response will come today when the central bank announces the results of an auction of as much as $20 billion in low-rate, 28-day loans to banks. The auction was designed to encourage banks to lend to each other, greasing the engine of the nation’s financial system.

Delta Financial Corp. filed its expected chapter 11 bankruptcy yesterday in Delaware, joining a group of failed mortgage lenders winding up their affairs under court protection, the Associated Press reported yesterday. The Woodbury, N.Y.-based lender had hoped for a rescue from hedge fund Angelo Gordon & Co., but was unable to meet a condition of the deal that required it to sell or refinance $500 million worth of loans. Turmoil in the secondary mortgage market that buys packaged home loans produced by companies such as Delta has made buyers scarce. As of Nov. 30, Delta held about $550 million worth of mortgage loans.

The Federal Reserve is set to change home-loan lending practices that are blamed for pushing the nation into a housing downturn, but the effort is expected to fall short of far more stringent efforts by Congress, the Washington Post reported on Saturday. The new Fed rules, which may be announced as soon as tomorrow, aim to curb predatory lending and the overuse of exotic home loans without hurting the financial system that backs mortgage lending, according to lawmakers and sources close to the Fed. Like the measures in Congress, the Fed rules would require lenders to clearly disclose mortgage information to consumers and to raise standards for approving mortgage applications. Fed officials, however, have indicated they may take a softer stance on some practices that have become widely disparaged in the mortgage crisis. For example, subprime mortgage holders are often forced to pay large penalties if they pay off their mortgages ahead of schedule. Many lawmakers want to eliminate those penalties, but some at the Fed have suggested in public remarks that the penalties can protect lenders that offer low rates to people with questionable credit.

Legislation to provide relief for struggling homeowners facing foreclosure got a boost today as Senate Finance Committee members agreed that a bill, most likely a combination of House and Senate measures, needs to reach the president’s desk before Congress adjourns for the year, CongressDaily reported yesterday. One measure introduced by Sen. Debbie Stabenow (D-Mich.) in May would temporarily change the tax code so that homeowners are not penalized when they work out a deal that keeps them in their home or they sell their home for less than the outstanding debt. In a letter to the committee, Sen. George Voinovich (R-Ohio), who co-sponsored Stabenow’s bill, suggested that the fastest route to President Bush could be for the Senate to take a House-passed bill that is similar to the Stabenow measure and waiting for Senate action. The main difference is that `the Senate measure calls for temporary change in the tax code whereas the House bill would make the change permanent. During a hearing yesterday by the Finance committee, witnesses provided several solutions that could help ease the housing market pressure, including a limited change to the bankruptcy laws.

Mortgage finance company Freddie Mac said that it plans to issue a new five-year, $3 billion reference notes security due Dec. 21, 2012, according to the Washington Post. Freddie Mac also announced plans to launch a $1 billion reopening of its 4.125 percent, two-year reference notes security that matures on Nov. 30, 2009. Both issues will be priced tomorrow and will settle Dec. 17. The new notes security will be offered through a syndicate of dealers headed by Merrill Lynch, Morgan Stanley and UBS Investment Bank.

Bankruptcy Judge Christopher S. Sontchi dismissed an involuntary bankruptcy petition filed against alternative energy company Earth Biofuels Inc. in a move that ends a volatile chapter in the company’s history, Bankruptcy Law360 reported yesterday. The case against the company began in July, when a number of investors accused it of generally failing to pay debts when due. The petitioners were investment companies and senior convertible noteholders, including Castlerigg Master Investments Ltd., Radcliffe SPC Ltd., Portside Growth and Opportunity Fund, Cornell Capital Partners LP and Evolution Master Fund Ltd. SPC. The noteholders were seeking to reclaim $33 million in unsecured notes, as well as interest fees, costs, expenses and other amounts. However, a majority of the parties involved in the case filed a motion last month saying that they had settled the dispute and that the judge should dismiss the bankruptcy petition.

As the subprime mortgage crisis reverberates through the economy, Sen. Charles Schumer (D-N.Y.) said that he will maintain his scrutiny of the credit-rating industry, which endorsed billions of dollars in troubled home loans, CongressDaily reported yesterday. Schumer said that he is concerned that the industry has an “inherent conflict of interest” because it receives fees from the issuers of mortgage-backed securities, rather than the investors interested in purchasing such products. Critics contend that the fee structure has resulted in firms observing lax underwriting standards so they can court business with major investment houses, which pay them for judging the quality of mortgage-backed securities. “The credit agencies have an inherent conflict of interest,” Schumer said. “They are paid after they make the determination of what the rating is, so they obviously have an incentive to be optimistic.”