February 14, 2018

Milbank Represents Ad Hoc Group of Senior Unsecured Noteholders of Walter Investment in Successful Chapter 11 Restructuring of Mortgage Business


Milbank has represented an ad hoc group of senior unsecured noteholders in connection with the $2.1 billion restructuring of Walter Investment Management Corp. (the “Company”), a diversified mortgage banking firm focused primarily on servicing and originating residential loans, through a prepackaged chapter 11 plan of reorganization. The transaction is notable because it is a successful restructuring and recapitalization of a mortgage business through a chapter 11 proceeding.

On February 9, 2018, the Company completed its restructuring and emerged from bankruptcy under the new name Ditech Holding Corporation. The reorganized Company, which is now majority owned by the former senior unsecured noteholders, will continue to serve customers through its operating subsidiaries, Ditech Financial LLC and Reverse Mortgage Solutions, Inc.

Pursuant to the prepackaged plan, the Company eliminated approximately $800 million of outstanding corporate debt from its balance sheet and enhanced its financial flexibility. Each holder of a senior unsecured notes claim received its pro rata share of (i) $250 million in aggregate principal amount of new second lien notes issued by the reorganized Company and (ii) $100 million in aggregate initial liquidation preference amount of preferred stock interests, which interests are mandatorily convertible into approximately 73% of the aggregate equity ownership of the reorganized Company (subject to dilution in certain circumstances).

The consummation of the Company’s restructuring is the culmination of complex negotiations and a meticulous process that began over a year ago. In particular, Milbank, its clients, and the various other stakeholders successfully navigated the constraints imposed by the Company’s complicated capital structure and the heavily regulated industry in which its subsidiaries operate. In particular, to address the regulatory concerns, the parties were able to limit the chapter 11 filing to the parent company, thereby keeping the operating subsidiaries out of bankruptcy.

The Milbank team was led by partners Dennis Dunne (Financial Restructuring), Gregory Bray (Financial Restructuring), Melainie Mansfield (Global Corporate), and Albert Pisa (Alternative Investments). Other Milbank team members involved in the transaction include consulting partner Michael Hirschfeld (Litigation), special counsel Haig Maghakian (Financial Restructuring), Jennifer Harris (Alternative Investments) and Alexander Lees (Litigation) and associates Najeh Baharun (Global Corporate), Yigal Gross (Alternative Investments), Ava Amini (Global Corporate), Rachel Franzoia (Financial Restructuring) and Richa Goyal (Global Corporate).