American Home Mortgage sued

By Daniel Wagner | daniel.wagner@newsday.com

10:49 AM EDT, August 27, 2007

Waldner's Home Environments Inc., a Farmingdale-based office furniture company that is helping to represent the more than 1,000 creditors owed money by the bankrupt American Home Mortgage Investment Corp., last week filed a separate lawsuit to recapture some of its losses.

In a complaint filed Aug. 22 in U.S. Bankruptcy Court in Wilmington, Del., Waldner's wrote that Melville-based American Home bought almost $350,000 in office furniture in the 45 days prior to the lender's Aug. 6 declaration of bankruptcy.

The filing showed that American Home had purchased and installed furniture so recently the associated invoices weren't generated until Aug. 7, the day after the company declared bankruptcy.

Under federal bankruptcy law, goods received by an insolvent company within 45 days of its declaring bankruptcy declaration can be recaptured by the seller immediately. Alternatively, the amount invoiced could be treated as an administrative expense and paid out of American Home's borrowed operating cash.

That means that if the court agrees with the Waldner's claim that American Home was insolvent as of June 22, anything it bought starting on that day would be subject to such actions.

Waldner's sent American Home a letter Aug. 10 demanding that the goods be returned by Aug. 16, but the lender "failed and refused and has not returned the Reclaimed Goods," last week's filing says.

Harold Berzow, the attorney with Uniondale-based Ruskin Moscou & Faltischek who is representing Waldner's, said that in addition to the determination of when American Home became insolvent, the claim could face additional hurdles. He said if the goods have been resold, or if a bank has placed a lien on them, Waldner's may lose its rights under that section of the bankruptcy code.

In that case, he said, Waldner's could still assert a priority claim for any goods delivered within 20 days of the bankruptcy.

Waldner's was selected Aug. 14 as one of seven members of a creditors committee charged with protecting the interests of the more than 1,000 people and companies to which American Home owes money.

The American Home bankruptcy proceedings have been dominated by claims from all types of creditors -- from banks, to short-term lenders to vendors -- that they are entitled to early repayment before the company commences its planned auctions of its loan servicing division and loan portfolio, and other assets.

On Friday, the company agreed to hand over servicing rights to $519 million in mortgage debt to Morgan Stanley, which owned the loans.

Attorneys representing American Home did not return calls seeking comment.