Irvine-based New Century Financial Corp. filed for Chapter 11 bankruptcy protection Monday after weeks of speculation about an imminent filing.
New Century also said it is cutting 54% of its 3,200 workers.
Along with the filing, New Century said on Monday it plans to sell its mortgage servicing business to Carrington Capital Management LLC of Greenwich, Conn., subject to bankruptcy court approval.
The purchase price for the servicing business is about $139 million.
New Century, which had been the nation’s second largest lender to homebuyers with imperfect credit, also is selling for $50 million a pool of loans to Greenwich Capital Financial Products Inc. of Greenwich, Conn., along with its interest in mortgages sold as bonds to investors.
Bankruptcy “is the best means available to allow the company’s assets and operations to be sold through an orderly process,” New Century Chief Executive Brad Morrice said.
New York-based CIT Group Inc. and Greenwich Capital also are providing New Century with up to $150 million in debtor-in-possession financing, the company said.
A bankruptcy filing has been expected for close to a month, after New Century’s mortgage bond buyers forced the company to buy back billions of dollars worth of bad loans.
New Century is the largest subprime lender to have filed for bankruptcy protection.
Other local lenders that have filed include ResMae Mortgage Corp. of Brea and People’s Choice Financial Corp. of Irvine.
