It appears that the financial troubles of Ditech Holding Corp., the nonbank formerly known as Walter Investment Management, are far from over.
Last year, the company emerged from Chapter 11 bankruptcy after completing a financial restructuring plan that eliminated $800 million in corporate debt and changed its name to Ditech Holding.
But that wasn’t enough to put the nonbank’s troubles behind it. Now, just 14 months after filing for Chapter 11, the company is filing for Chapter 11, again.
Ditech announced early Monday morning that it, along with its subsidiaries Ditech Financial and Reverse Mortgage Solutions, have entered into a “restructuring support agreement” that will seek to restructure the company’s debt, because the last time wasn’t enough, apparently.
According to the company, through the restructuring, the company is attempting to eliminate $800 million more in debt, recapitalize, improve its liquidity, and build an “appropriately sized working capital facility.”
To facilitate this restructuring, Ditech has filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York.
According to the company, it plans to continue operating while it’s in Chapter 11, but notes that it is still considering “strategic alternatives” that could include selling the company, selling off some of the company’s assets, or changing the company’s business model.
In June 2018, Ditech warned investors that it was exploring “strategic alternatives to enhance stockholder value,” that included possibly selling the company. That move came after its initial bankruptcy proceedings, which stemmed from a long string of financial losses for the company.
The company declared bankruptcy back in December 2017, hoping that it could emerge on solid footing, but 2018 was more of the same for Ditech.
In November, the nonbank ran into more trouble when it was kicked off of the New York Stock Exchange over the company’s low share price and market cap.
And then, just a few weeks ago, the company fired its chief operating officer, Ritesh Chaturbedi, who’d only been with the company for nine months.
And now, the company is trying to extinguish even more of its debt.
According to Ditech President and CEO Thomas Marano, “market challenges” have put pressure on the company and the company feels that it must make this move to ensure that it can continue to operate.
“Since we completed a recapitalization last February, we have made important progress on our strategic initiatives and our expense management efforts. However, as a result of market challenges that have continued to accelerate and pressure our business, we must take further action,” Marano said in a statement.
“We intend to use this process to restructure our balance sheet and help us meet our obligations. We will continue to evaluate a broad range of options with the goals of maximizing value and creating the best path forward for our business,” Marano added. “We are pleased to have the support of our lenders in this process.”
One thing that’s different this time from the first time Ditech filed for Chapter 11 is that its subsidiaries Ditech Financial and Reverse Mortgage Solutions are included in the bankruptcy proceedings.
In an effort to provide more information to its customers about the bankruptcy filing, Ditech and RMS sent letters to their customers and put out FAQs about the process as well, which includes questions like: “Didn’t you go through this process a year ago? What’s different this time?”
Click here to read Ditech’s letter and here to read RMS’ letter to customers, and click here to read Ditech’s FAQs and here to read RMS’ FAQs.
“As we move forward, we remain firmly committed to our mission of serving customers through the homeownership journey,” Marano concluded. “I want to thank our employees for their continued dedication to serving our customers. Our people will continue to be the driving force behind our success.”
