By John Dickerson
The court won’t hear arguments about when to resume monthly checks for investors until late September, said U.S. Bankruptcy Judge Randolph Haines in his opening statement at today’s hearing in Mortgages Ltd.’s bankruptcy.
The announcement came to a courtroom packed with more than a dozen attorneys and about 50 other investors and onlookers, many of whom stood in aisles and along the walls of the crowded room. A number of investors sighed upon hearing the news.
Mortgages Ltd.’s more than 2,700 investors had been hoping their monthly checks would be reinstated after today’s hearing. Most of the investors put hundreds of thousands into the company, and many relied on the monthly payments as their sole income (For example, one investment of $500,000 reaped regular monthly payment of about $4,000 for almost 10 years.)
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The hearing began at 2:30 (and is still in progress) on the sixth floor of the black granite U.S. Bankruptcy Court in downtown Phoenix. More than 15 lawyers lined up at the lectern to ask for speaking time. Judge Haines then said today’s hearing would focus on DIP financiers (the outside companies vying to loan money to Mortgages Ltd., in exchange for deeds of trust or other assets).
Judge Haines set September 22 as the date when he will hear arguments for and against resuming investor payment. He will not make a decision at that time.
Mortgages Ltd. attorney Carolyn Johnsen used her opening statement to say Mortgages Ltd. is righting itself and will survive for years to come as a profitable company. She then reprimanded a few of the large developers whose loans Mortgages Ltd. failed to fully fund (and who stopped making their payments as a result).
“We’re no longer as a company going to sit by so borrowers can taint the company and get discounts,” Johnsen said.