ECC Capital/Encore Credit - Wholesale Subprime Lender

Gobbled up by Bear Stearns.

I'm adding this one retroactively, as the details have come out. The following excerpt from the first article should make it clear that this was an "implosion" and not voluntary by any stretch of the imagination:

The investment bank was set to pay $26 million for ECC Capital's loan origination business.

But ECC actually ended up paying $7 million to Bear Stearns to close the deal. The company owed $33 million to Bear Stearns as part of money it was lent to make loans.

ECC wasn't able to sell the loans to investors for as much as it expected, resulting in the debt to Bear Stearns.

The sale is something of a going-out-of-business sale for ECC. The company recently counted a $100 million market value, and nominally sold for a quarter of that. It went public in 2005, raising $354 million.

Guess ECC didn't have much bargaining leverage—and Bear Stearns didn't want to have to write down that $33 mln. Slick.

The Irvine, CA-based ECC originated $14 bln of loans as of 2005. The now-unit of Bear Stearns is still operating in some unknown capacity relative to its peak level.