Wall Street was predicting New Century Financial Corp. would file for bankruptcy nearly a month before the Irvine-based subprime lender made it official a week ago.
Now that New Century is in bankruptcy court, it might not take long for the bulk of the company’s operations to be sold off and the company is effectively disbanded, legal watchers said.
“I give it a couple of months,” said Marc Winthrop, founder of Newport Beach-based Winthrop Couchot Professional Corp., a law firm that specializes in bankruptcy proceedings.
New Century filed for bankruptcy reorganization, but “their goal is to liquidate (the company) in pieces,” Winthrop contends.
As the poster child of the ongoing subprime meltdown, New Century ranks among the biggest bankruptcy filings ever for Orange County. It likely rivals only the county’s own 1994 bankruptcy filing in terms of national notoriety.
Despite the headlines New Century has generated, it may not be the largest company here to go broke.
That title likely falls to Newport Beach-based Smith International Inc., according to bankruptcy observers.
Smith, which at one time was the second-largest maker of drill bits for the oil industry, filed for bankruptcy back in 1986, along with its main unit, Irvine-based Smith Tool Co.
For more on this story, see the April 9 edition of the Business Journal.
