Ayer Quoted on Fall of Ownit Mortgage
In an article in the business section of The Reporter, Professor of Law Emeritus Jack Ayer, an expert in bankruptcy law, was quoted on the impact of Ownit Mortage, known as the eleventh largest subprime lender in America, filing for Chapter 11 bankruptcy in December 2006.
In the article, Ayer said, "For the moment, there is still an entity called 'Ownit' -- which is to say, somebody who is supposed to take the payments and apply them according to contract. If that is the case, then life ought to go on as before." Ayer also noted that in Chapter 11 proceedings, courts do not typically appoint an independent trustee to manage the troubled company. "Instead, the debtor becomes known as a 'debtor in possession," he said.
"This may sound like a license for lunatics to run the asylum, but it doesn't need to be that," Ayer said, adding that if the old management is honest but just unlucky, then leaving them in place may be cheaper than putting in a whole new apparatus. "And a lot of times in business cases, the debtor will turn out to be 'new managers' who were put in there by the banks before the case ever began."
The Reporter.com/January 22, 2007
In the article, Ayer said, "For the moment, there is still an entity called 'Ownit' -- which is to say, somebody who is supposed to take the payments and apply them according to contract. If that is the case, then life ought to go on as before." Ayer also noted that in Chapter 11 proceedings, courts do not typically appoint an independent trustee to manage the troubled company. "Instead, the debtor becomes known as a 'debtor in possession," he said.
"This may sound like a license for lunatics to run the asylum, but it doesn't need to be that," Ayer said, adding that if the old management is honest but just unlucky, then leaving them in place may be cheaper than putting in a whole new apparatus. "And a lot of times in business cases, the debtor will turn out to be 'new managers' who were put in there by the banks before the case ever began."
The Reporter.com/January 22, 2007