Friday, May 04, 2007

New Century Update: "Hardship" Is Relative, I Guess

by Tanta on 5/04/2007 07:19:00 AM

The AP reports that New Century has failed to find a buyer for its loan origination business, and has laid off over 2,000 employees in a conference call:

Speaking on the call, New Century President and Chief Executive Brad A. Morrice said despite a number of potential buyers for its wholesale and consumer-direct operations, "none of those potential deals have come to pass."

The deadline for bids for the business unit was Wednesday. New Century's request to extend the deadline was not supported by its creditors committee, Morrice said, adding that efforts to sell the unit had stopped.

New Century will retain only service personnel and about 250 members of its corporate team as the company continues efforts to liquidation, Morrice said.

"I realize that today's announcement was not the news that any of us hoped to hear," Morrice said, his voice quivering at times. "I would be remiss if I did not say how sorry I am for any grief or hardship that any of you may experience as a result of this situation."

That "quivering voice" is a nice touch, isn't it? For some reason, it reminded me of this other AP item from Wednesday:
In court papers filed Tuesday evening, New Century sketched out a revised scheme for bankruptcy bonuses for 34 high-ranking executives, one that replaces a package of executive rewards that drew criticism from U.S. Trustee Kelly Beaudin Stapleton.

Chief Executive Brad Morrice, who was in the original bonus plan, does not appear to be on the extra-pay list in the revised version. However, people named by Morrice or New Century's board to policy-making positions are still in the company's bankruptcy bonus pool. . . .

New Century, which hasn't yet revealed what it paid top executives in 2006, says it won't reveal the names or bonuses for the policy-making leaders it wants to pay extra. Meola, Theologides and two other upper-echelon leaders were named in court papers.

Before New Century's April 2 bankruptcy filing, the Securities and Exchange Commission began probing sales of stock by company leaders who may have known in advance of problems that would take New Century down.

In addition to renewing its request to pad the pay packages of top executives left on the job, New Century this week asked for clearance to hire two law firms in addition to the three already put on the payroll for the Chapter 11 case.

I wonder how quivery Morrice's voice got when he was in there asking for bonuses for the big dogs and justifying retaining 250 managers while unloading all the managees.

Anybody else ready to go back to the Old Century, or is it just me?

UPDATE: (Thanks, jb!) I am not going to say that if you've ticked off KPMG, you've really been and gone and done it. That would be rude, for Peat's sake. So I simply provide the following without further comment:
NEW YORK (Reuters) -- KPMG has quit as auditor of bankrupt subprime lender New Century Financial Corp., which has hired forensic accountants to investigate how the company valued its stake in mortgage-backed bonds.

KPMG notified New Century last week that its client-auditor relationship had ceased, the subprime lender said on Thursday in a regulatory filing.