Citadel agreed to purchase the assets of ResMae Mortgage, the latest subprime mortgage lender to go belly-up.
The Chicago hedge fund said it will pay $22 million to "acquire certain assets and satisfy certain liabilities" for the California lender.
ResMae, which declared bankruptcy last month, said the U.S. Bankruptcy Court for the District of Delaware approved its agreement with Citadel. The agreement will provide for "the continued funding and operation of ResMae and a roadmap for ResMae to complete a proposed plan of reorganization and emergence from Chapter 11 in the next few months," it said.
Citadel beat out at least one investment bank,
, in the bidding. Credit Suisse had agreed to purchase ResMae's assets last month for $19 million.
But in a notice to loan officers on its Web site, ResMae said the agreement reached with Citadel "reflects the culmination of a bidding process in which multiple offers were received, highlighting ResMae's long-term value within the subprime mortgage industry."
The mortgage lender's woes reflect the general downturn of the subprime mortgage industry. Subprime companies generally lend to those with the poorest credit histories and then sell the mortgages as securities in a process known as securitization.
Shares of the main subprime lenders have been beaten to a pulp over the last month. Many have reported dismal results as defaults and delinquencies rise.
Specialized lenders such as
Accredited Home Lenders
have seen shares fall more than half their values in the last month. Shares of larger, more robust mortgage players such as
have also dropped amid concerns that the downturn might not be contained to just the subprime industry.