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SEC Filings

DITECH HOLDING CORP filed this Form 10-K on 04/16/2019
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Based on analyses we prepared with our financial advisors in connection with the Strategic Review (including analyses of proposals received by us during such review), analyses we prepare from time to time in connection with our internal business planning processes, and the risks and uncertainties that could adversely impact our liquidity plan, during the Strategic Review management and our Board of Directors determined that the actions we had taken and actions that we plan to take to improve our liquidity position, may not have been adequate to meet our future obligations.
Therefore, in connection with the Strategic Review, during the fourth quarter of 2018, we entered into non-disclosure agreements with, and we along with our financial and legal advisors began to have discussions with, certain of our corporate debt holders and their advisors regarding potential strategic transactions that may involve implementation through an in-court supervised Chapter 11 process.
On January 17, 2019, we received a notice from NRM initiating the process of termination under the NRM Subservicing Agreement. In connection therewith, we have subsequently deboarded certain of the loans we previously subserviced for NRM under the NRM Subservicing Agreement. Any termination of the NRM Subservicing Agreement would not be effective until a servicing transfer has been completed in accordance with applicable requirements. We are reviewing the grounds for termination in consultation with our stakeholders and are considering all of our options with respect thereto including legal rights and remedies. We are proceeding with our strategic alternatives efforts assuming there is not an ongoing subservicing relationship with NRM. Our plans are not contingent on any continuing relationship with NRM.
On February 8, 2019, Ditech Holding Corporation and certain of its direct and indirect subsidiaries (collectively, the Debtors) entered into the DHCP RSA with the Consenting Term Lenders holding, as of February 11, 2019, more than 75% of the term loans outstanding under the 2018 Credit Agreement. On February 11, 2019, the Debtors filed the DHCP Bankruptcy Petitions under the Bankruptcy Code to pursue the DHCP Plan.
Pursuant to the DHCP RSA, the Debtors have agreed to the principal terms of our financial restructuring with the Consenting Term Lenders, which will be implemented through a prearranged plan of reorganization under the Bankruptcy Code and which provides for the restructuring of our indebtedness through a recapitalization transaction that is expected to reduce gross corporate debt by over $800 million and provide us with an appropriately sized working capital facility or other liquidity enhancing transaction upon emergence.
The DHCP RSA also provides for the continuation of our prepetition review of strategic alternatives, whereby, as a potential alternative to the implementation of the DHCP Reorganization Transaction, any and all bids for our company or some or all of our assets will be evaluated as a precursor to confirmation of any Chapter 11 plan of reorganization.
The review of strategic alternatives provides a public and comprehensive forum in which we are seeking bids or proposals for three types of potential transactions, as described below. If a bid or proposal is received representing higher or better value than the DHCP Reorganization Transaction, it will either be incorporated into the DHCP Reorganization Transaction or pursued as an alternative to the DHCP Reorganization Transaction in consultation with the Consenting Term Lenders and subject to the DHCP RSA.
The three types of transactions for which bids are being solicited are:
a sale transaction meaning, a sale of substantially all of our assets, as provided in the DHCP RSA;
an asset sale transaction meaning, the sale of a portion of our assets other than a sale transaction consummated prior to DHCP Effective Date; provided such sale shall only be conducted with the consent of the Requisite Term Lenders; and
a master servicing transaction meaning, as part of the DHCP Reorganization Transaction to the extent the terms thereof are acceptable to the Requisite Term Lenders, our entry into an agreement or agreements with an approved subservicer or subservicers whereby, following the DHCP Effective Date, all or substantially all of our mortgage servicing rights are subserviced by the new subservicer.
The DHCP RSA presently contemplates the following treatment for certain key classes of creditors under the DHCP Reorganization Transaction:
DHCP DIP Warehouse Facilities Claims - On the DHCP Effective Date, the holders of DHCP DIP Warehouse Facilities claims will be paid in full in cash;
Term Loan Claims - On the DHCP Effective Date, the holders of Term Loan Claims will receive their pro rata share of new term loans under an amended and restated credit facility agreement in the aggregate principal amount of $400 million, and 100% of our New Common Stock, which will be privately held;
Second Lien Notes Claims - On the DHCP Effective Date, the holders of our Second Lien Notes will not receive any distribution;