Judge delays deadline in Capmark servicing sale


27 October 2009

WILMINGTON, Del., Oct 27 (Reuters) - A bankruptcy judge on Tuesday rejected plans by Capmark Financial Group Inc for a Saturday bid deadline for its mortgage servicing business, which it has proposed selling to Berkshire Hathaway Inc and Leucadia National Corp.

Judge Christopher Sontchi said during Capmark's first bankruptcy hearing the company must wait until after creditors have formed a committee, planned for Monday, before asking for a bid deadline.

Capmark is one of the largest U.S. commercial real estate services companies, and now one of the biggest victims of the rapidly declining commercial real estate market. The company filed for bankruptcy on Sunday with $21.0 billion in liabilities and $20.1 billion in assets.

"We recognize that this is a financial company and we have taken steps so that the loss of value in other cases, the loss of jobs, should not happen here," said Martin Bienenstock, an attorney with Dewey & LeBoeuf, which is representing Capmark.

The company provides loans for office buildings, hotels, multifamily housing and retail. It also services commercial loans on behalf of other lenders and manages real estate-related investment funds.

Capmark posted a $1.62 billion second-quarter loss and has been trying to raise cash through targeted sales.

It plans to sell its mortgage and loan servicing portfolio, which it says is one of the world's largest, with Berkshire Hathaway and Leucadia National providing an initial bid of $490 million.

Michael Kessler of Dewey & LeBoeuf told the court the business is being marketed by Beekman Advisors Inc, and 11 parties have expressed interest.

Judge Sontchi said the proposed sale motion would be heard next week, giving time for creditors to organize and review the procedures but also pushing back the company's original timeline for a Saturday deadline for bids.

The company has $525 million cash to fund its bankruptcy, although Kessler said the company may seek a debtor-in-possession, or DIP, loan "to give comfort to investors" with regard to its servicing operations.

The company also received court approval for its so-called first day motions, routine requests relating to payroll, retaining professionals and the use of bank accounts.

The case is in re: Capmark Financial Group, U.S. Bankruptcy Court, District of Delaware, No. 09-13684. (Reporting by Thomas Hals; Additional reporting by Caroline Humer in New York; Editing by Gary Hill)