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RMF bankruptcy liquidation plan approved by Delaware court

  • May 4, 2023

Reverse Mortgage Investment Trust (RMIT), parent company of former reverse mortgage industry lender Reverse Mortgage Funding (RMF), was approved for a bankruptcy liquidation plan by Judge Mary Walrath of the U.S. Bankruptcy Court District of Delaware on April 28.

The approved liquidation plan was the third proposed to the court. It received approval roughly 24 hours after Judge Walrath delayed implementation of a second plan due to concerns that included having adequate enough means for the liquidation plan’s implementation; the treatment of executory contracts and unexpired leases; and exculpation of claims and causes of action in the liquidation.

The supplemental declaration sufficiently addressed those concerns, according to the judge.

“This declaration includes a more fulsome description of the expected estate funding that would be available throughout the wind-down process, and explains how administrative claims are contemplated to be paid,” Patrick Venter, an attorney for RMIT, told Judge Walrath during the hearing. “We’ve also elaborated on the anticipated costs of remaining in Chapter 11, and why that is not an option for the estates at this time.”

The order signed by Judge Walrath includes plans for $1.225 billion in long-term funded debt. RMIT’s mortgage servicing portfolio value was estimated at $25.5 billion when Chapter 11 was first filed in late 2022, according to reporting from Law360.

“The Plan shall be deemed a motion to approve the good-faith compromise and settlement of all such claims, interests, causes of action, and controversies, and the entry of the Confirmation Order shall constitute the Court’s approval of such compromise and settlement under section 1123 of the Bankruptcy Code, as well as a finding by the Court that such settlement and compromise is fair, equitable, reasonable, and in the best interests of the Debtors and their Estates,” the order states.

RMIT creditors are taking a

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