A reverse mortgage lender that ceased operations in May has been forced into involuntary bankruptcy.
A judge in Delaware federal court has granted the request of Flagstar Bank, Mirae Asset Securities, and Industrial and Commercial Bank of China Financial Services to force Virginia-based Live Well Financial into Chapter 7 liquidation, according to a report be RichmondBizSense.com.
Live Well, until recently one of the nation’s top 10 reverse lenders, ceased operations without warning in May. The company provided little explanation, merely citing “unexpected circumstances” on its website. Live Well laid off more than 100 employees, including founder and CEO Michael Hild.
The three creditors claim that Live Well owes them more than $130 million collectively, according to RichmondBizSense.com. They filed a petition to force the lender into bankruptcy last month.
Live Well had argued that involuntary bankruptcy would cause further problems, and that it deserved the usual 21 days to respond to the petition, RichmondBizSense.com reported.
The court’s decision, however, effectively ends the Live Well’s current efforts to liquidate its assets and hands control over to attorney David Carickhoff, who has been appointed trustee for the company.
Although Live Well has offered little explanation for its sudden implosion, the story is beginning to emerge. Last month, Ginnie Mae sent a notice of default to the lender, according to RichmondBizSense.com. Live Well was also in default of a securities agreement with Fannie Mae.
The Ginnie Mae letter said that Live Well received a margin call April 30 that “resulted in a substantial depletion of its liquidity,” according to RichmondBizSense.com. The letter also stated that the lender had not complied with Ginnie Mae’s request for further information, and that two of its four warehouse lenders had cut it off.
Live Well is also reportedly the subject of probes by both the FBI and the Securities and Exchange Commission.