Ditech Holding Corporation (NYSE: DHCP), parent company of Reverse Mortgage Solutions (RMS), announced today that it has filed filed for voluntary reorganization under Chapter 11 of the U.S. Bankruptcy Code. As a result of the process, some borrower payments may have been temporarily impacted, the company said in a notice to customers. Certain subsidiaries including Ditech Financial, LLC and RMS will be entering into a Restructuring Support Agreement (RSA) with some of its lenders that hold over 75 percent of Ditech Holding’s term loans.

“The RSA provides for a restructuring of the Company’s debt while the Company continues to evaluate strategic alternatives,” the company said in a press release. “Under the RSA, the Company will pursue a recapitalization that deleverages its capital structure by extinguishing over $800 million in corporate debt.”

In a letter to its customers, RMS stated that customers of its Reverse Mortgage servicing business should not be affected by the financial shuffling of its parent company. The letter assures its reverse mortgage client that RMS will continue to operate through the Chapter 11 process.

“The restructuring process has not changed your reverse mortgage, and should not change the scheduled or unscheduled draw process,” the letter says.

The letter alluded to some customers having recently received notices from their banks concerning checks from RMS that borrowers recently attempted to deposit. RMS assures its customers that they can re-deposit any returned checks in a few days and that they will be honored, and that they will reimburse customers up to $35 for fees they may have incurred relating to a returned check.

The letter also stresses that RMS is aiming to continue providing a level of service that customers “have come to expect,” and that they intend to move through the Chapter 11 process “as quickly as possible” while providing regular updates to customers as needed.

Resulting from the RSA, Ditech says that it is still considering a range of options to attempt to find its way back to financial solvency, including a change to the company’s core business model, sales of either some or all of the company’s assets or an outright sale of the full company.

“We intend to use this process to restructure our balance sheet and help us meet our obligations,” said Thomas F. Marano, president and CEO of Ditech Holding Corporation in the press release. “We will continue to evaluate a broad range of options with the goals of maximizing value and creating the best path forward for our business. We are pleased to have the support of our lenders in this process.”

Last month, Ditech stated that it elected not to make an approximately $9 million cash interest payment to its creditors in December 2018, putting the company at risk of default. However, it also entered into a forbearance agreement with a segment of its creditors, which they did to avoid another bankruptcy filing. The company also revealed that it terminated then-COO Ritesh Chaturbedi’s employment.

In November 2018, Ditech was delisted from the New York Stock Exchange (NYSE) following warnings that stemmed from its failure to meet the NYSE listing standard. Earlier that year, Ditech emerged from bankruptcy after having previously done business under the name Walter Investment Management Corporation. Walter acquired Reverse Mortgage Solutions in 2012, and in 2017, Walter decided to stop originating Home Equity Conversion Mortgages (HECMs). RMS then turned to servicing only, and closed its retail channel.

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