The presiding judge in the bankruptcy case involving Reverse Mortgage Investment Trust (RMIT) — the parent company of former leading reverse mortgage lender Reverse Mortgage Funding (RMF) — has approved a request to transfer the company’s bankruptcy status to chapter 7 from its current chapter 11 status, HousingWire.com reported. The move allows the RMIT estate to sell off its remaining assets to satisfy creditor claims. It can also provide an additional mechanism for resolving disputes while reducing the administrative costs the estate would need to continue paying under chapter 11. In the original request, the RMIT plan administrator explained that conversion to chapter 7 was being sought to preserve the value of the estate’s remaining assets and ease the overall liquidation process. “The Plan Administrator hopes that by converting this case, instead of seeking dismissal or simply resigning, that the estate will be able to preserve value of any potential recovery from the TCB dispute or other litigation for the benefit of all unsecured creditors,” the January filing explained. “Absent conversion and the installation of a chapter 7 trustee, this value could be significantly eroded, if not entirely eliminated.” Presiding Judge Mary Walrath of the U.S. Bankruptcy Court for the District of Delaware found that the request was “due and sufficient under the circumstances.” The conversion will be effective anywhere from five to 10 business days after the entry of the March 12 order, according to the court filing.
