ECC Capital/Encore Credit - Wholesale Subprime Lender


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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.

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Important: This company is on our list of lending operations that have "imploded". However, please note that "imploded" is a somewhat subjective and does not necessarily mean operations are ceased permanently: it can mean bankruptcy filing, temporary but open-ended halting of major operations, or "firesale" acquisition. All information here is provisional, and may contain inaccuracies (especially newer information). If you are planning on doing business with this company or any other one listed on this site, you should inquire with them directly on whether they can still meet your needs. Many are still operating in some capacity.