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Judge considers ruling on Centrix bankruptcy
DENVER (3/11/08)--A federal bankruptcy judge has suspended taking depositions, in order to rule on whether to dismiss a financial reorganization of subprime auto lender Centrix Financial LLC. More than two-thirds of Centrix's portfolio is owned by about 230 credit unions across the country (News Now Jan. 23). The court order signed March 6 by U. S. Bankruptcy Court Judge Elizabeth E. Brown for the District of Colorado is in response to a March 4 request by Centrix founder and former president Robert Sutton, plus two other individuals and a limited liability corporation to the terms of a financial reorganization. Sutton and the other parties seek to stop the Chapter 11 financial reorganization of the failed lender, and instead have the judge convert Centrix to Chapter 7 dissolution of the company, according to court records. The court also vacated a March 14 scheduled non-evidentiary hearing, and set a deadline of April 22 for Centrix’s responses to several other motions. The case has been going on since 2006. The reorganization plan is facing a six-week vote by creditors, many of them credit unions. The sale of Centrix’s assets for $30 million had been approved Jan. 17 by Brown in Denver (News Now Jan 23). Brown said the approval for the sale--to Kendrick CF Acquisition Inc., an investment group made up of Centrix's senior lender and CEO--is conditional on the resolution of minor credit union issues, said attorneys. (TheDeal.com Jan. 22). Once Centrix resolves the issues, the court will enter its official order (News Now Jan. 23). In the deal, Centrix's senior lender Falcon Investment Advisers would trade more than $30 million in secured debt for control of Centrix's portfolio, which has $1.9 billion in subprime auto loans, mostly from credit unions. Falcon would receive 70% of Centrix's new equity. Everest Reinsurance Holdings Inc. would receive 25%. Centrix CEO Robert Sutton would get 5%. No other companies bid on the company's assets at a recent auction.


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