Delta Financial Corp., the Woodbury-based subprime mortgage lender, filed for bankruptcy Monday, almost two weeks after announcing it would stop originating loans and file for court protection. Included in Delta’s list of its top creditors were subsidiaries of HSBC, KPMG and Deutsche Bank — all multinational banks that have lost hundreds of millions of dollars this year on bad mortgage investments.
On Nov. 21, Delta “tested the securitization market” by trying to resell the $534.3 million of loans still on its books. When that didn’t work, the lenders terminated standstill atgreements and declared Delta to be in default of its agreements.
Finally, on Dec. 5th, one of the lenders discontinued all financing. The following morning, at 8 a.m., Delta’s board voted to file for bankruptcy. That day, 430 workers were laid off, leaving the remaining 50 “essential employees.”
All of Delta’s laid-off employees received severance payments, the filing says.
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