The PMI Group, one of the country’s largest mortgage insurers, filed Chapter 11 bankruptcy proceedings last week to an amount of $736 million in debts, according to a HousingWire pieceon the development.
The bankruptcy filing is intended to preserve the company’s stock value and allow for proper reorganization of the firm’s resources, according to a statement from the company.
“The company will continue to operate in the ordinary course of business as ‘debtor-in-possession’ under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court,” PMI said in a statement.
Ever since the housing bubble burst, PMI has grappled with numerous issues stemming from the substantial number of defaults and foreclosures that accompanied the slowing market. Indeed, its bankruptcy filing is not surprising, especially after issues with liquidity, negative analyses by economists and media outlets, a formal suspension by Fannie Mae, and even a complete seizure of the firm by the Arizona Department of Insurance (ADI), PMI’s official regulator. ADI, in fact, receives a large share of the blame for the bankruptcy in PMI’s statement.
According to the statement, ADI’s Director is seeking the appointment of a receiver for the Regulated Insurance Entities, and a hearing for the selection has been set for Jan. 10, 2012.