American Home Mortgage files Chapter 11 2 hours, 9 minutes ago

American Home Mortgage files Chapter 11 2 hours, 9 minutes ago



NEW YORK - American Home Mortgage Corp. filed for bankruptcy protection on Monday, the latest casualty of a mortgage industry that has plunged into distress.

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The Melville, N.Y.-based mortgage lender asked a court in Wilmington, Del. for Chapter 11 bankruptcy protection from its lenders.

The filing follows a week of turmoil for the 10th-biggest U.S. home lender. Ten days ago, American Home Mortgage froze the 70 cent-per-share dividend scheduled to be paid that day.

Last week, American Home Mortgage said many of its lenders wanted their money back, and said it was unable to deliver as much as $800 million for mortgage loans promised to home buyers.

The company said late last week it planned to lay off almost 90 percent of its 7,000 employees.

The stock market had already anticipated that the company was likely to go bankrupt. The company's shares, which closed 2006 at more than $35, tumbled to 69 cents on Friday. In premarket trading Monday, the stock fell 20 cents, or 28.1 percent, to 50 cents.

American Home Mortgage's 40 biggest creditors include virtually all of Wall Street. The company's three biggest creditors are Deutsche Bank AG, Wilmington Trust Co., and JPMorgan Chase & Co.

The company hired the law firm Young Conaway Stargatt & Taylor LLP as general bankruptcy counsel. American Home Mortgage also hired Stephen F. Cooper to be chief restructuring officer. Cooper was also chief restructuring officer for Enron Corp.