On June 24, 2022, Plano, Texas-based First Guaranty Mortgage Corp. (FGMC) announced the immediate layoff of 75 percent of its workforce in what has been the largest single layoff this year.
“FGMC has experienced significant operating losses and cash flow challenges due to unforeseen historical adverse market conditions for the mortgage-lending industry, including unanticipated market volatility,” Cassie Vacante, the company’s senior vice president of human resources, wrote in the state-required Worker Adjustment and Retraining Notification filing.
Less than one week later, First Guaranty Mortgage Corp. filed for bankruptcy and is seeking Chapter 11 protections. The lender and its affiliate, Maverick II Holdings LLC, submitted filings in the U.S. Bankruptcy Court for the District of Delaware as it explores restructuring options, it said in a press release.
FGMC said it is finalizing debtor-in-possession financing which will allow it to close and fund approved consumer loans under existing terms and conditions and support employee and vendor payments. This financing package has received approval from Judge Craig Goldblatt of the U.S. Bankruptcy Court on an “interim basis.”
The judge’s order also requires the company to complete its plan for reorganizing its finances under Chapter 11 of the U.S. bankruptcy code within 120 days.
According to court documents, FGMC said it owes more than $418 million to “warehouse lenders.”