NEW YORK--(BUSINESS WIRE)--Lehman Brothers Holdings Inc. (“Lehman”) today announced the completion of the sale of substantially all of the assets and transfer of substantially all of the insured deposits of its indirectly wholly-owned multi-billion dollar subsidiary, Aurora Bank, FSB, (“Aurora”), concluding a process that successfully avoided a potentially costly government resolution process of Lehman’s two banks and that will ultimately yield significant recovery value for the Lehman creditors.
Shortly after Lehman filed for bankruptcy in 2008, Aurora and Lehman’s other multi-billion dollar subsidiary bank, Woodlands Commercial Bank (“Woodlands”), were at risk of being seized and placed into receivership by the FDIC. Instead, with the support of its creditors and the consent of the U.S. Bankruptcy Court, and working cooperatively with the Federal and state bank regulatory agencies, Lehman made a series of capital and liquidity injections to initially stabilize and ultimately recapitalize the banks, positioning them for this more favorable outcome.
Doug Lambert, Managing Director with Alvarez & Marsal said: “In completing the sale of substantially all of Aurora through an open-door process, we have achieved something that has rarely been accomplished over the past few years. In December 2011, we completed the resolution process of Woodlands Bank at no loss or cost to the FDIC or taxpayers, and now with the completion today of the sales of Aurora’s residential servicing assets to Nationstar Mortgage LLC (“Nationstar”) and the transfer of all customer deposits to New York Community Bank, we have taken a significant step toward the successful resolution of Aurora.
“During the past three and a half years, we successfully oversaw management of the two banks’ resolution processes, restoring regulatory capital which allowed the time necessary for the overall financial markets to recover from the economic downturn, averting enormous liability to the Lehman estate and ultimately allowing us to pay off or transfer all customer deposits while preserving potential recovery value for Lehman creditors.”
After an extensive marketing process that began over a year ago with Aurora, it was determined that the best economic result could be achieved through the breakup of Aurora’s business lines and individual disposition of Aurora’s diverse asset portfolios through a series of sale transactions. Over the past several months, Aurora’s residential loan portfolios were sold to three separate purchasers; the commercial loan portfolios were sold to a single purchaser; the commercial servicing assets were sold to Ocwen Financial; the residential servicing assets were sold to Nationstar; and its customers’ deposits were transferred to New York Community Bank.
The sale of the residential servicing assets included all of the mortgage servicing rights and related advances owned by Aurora Bank and its wholly owned subsidiary, Aurora Loan Services, LLC. It also included the sale of the servicing facility in Scottsbluff, Nebraska and the assignment of leases of the facilities in Indianapolis and Littleton, Colorado. Though not a required part of the transaction, Nationstar has said that many of Aurora’s employees have taken positions with Nationstar, allowing continuity of the excellent service received by borrowers as well as minimizing, as much as possible, the significant personal impact to the employee base from the sale transaction.
Following the closing of its insured deposit portfolio, Aurora will continue to exist as a federal savings bank as it seeks to comply with the terms of a consent order it entered into along with 13 other regulated institutions in April 2011. As a result of the sales announced today, Aurora will retain substantial liquid assets which will be used to comply with its obligations under the consent order and ultimately distribute its remaining proceeds to Lehman creditors.