Restructuring specialist Thomas Allison, the company's new president and chief restructuring officer, says the security agreement and promissory note with USA Investment Partners LLC calls for USAIP to pledge ownership interests in certain real estate projects as security for a set of receivables owed USACM. The agreement converts the receivables into a loan with an interest rate, maturity date, default provisions, and provides security for obligations owed by USAIP.

Allison's company, Mesirow Financial Interim Management, is assisting USA Commercial Mortgage in reorganizing operations and securing debtor-in-possession financing in order to rebuild the company's core loan origination, underwriting and servicing operations. When it filed Chapter 11 in April, the company reported assets totaling $962 million.

Allison says Mesirow will have completed its account reconciliations for each direct lender and each fund member by early July, the same month Allison says he expects to file the company's reorganization plan.

The interim plan is for USA Commercial Mortgage to file a motion with the Bankruptcy Court to be heard on July 25 for authority to make appropriate payments to investors from the money held in the Collection account and to begin regular payments to investors on performing loans. The company will seek authority to pay investors on non-performing loans as USACM collects on these loans, Allison says.

"We are very aware of the impact on our investors of the stoppage of interest payments," Allison said in a prepared statement. "We will be ready to make appropriate distributions to investors after that date, subject to court approval."

Since the bankruptcy petitions were filed, USA Commercial Mortgage has collected $48.3 million in principal from performing and non-performing loans, as well as $8.6 million in previously uncollected interest payments. Allison also said this week that USA Commercial Mortgage received Bankruptcy Court approval earlier in the month to return funds held in escrow for its Bundy Canyon $8.9-million loan which was never funded. The funds were to be returned Thursday, June 15 to the 117 investors.

USA Commercial Mortgage Co. and certain of its affiliates filed on April 13 voluntary petitions for reorganization under Chapter 11 with the US Bankruptcy Court for the Southern District of Nevada. The company also does business under the name USA Capital. Filings for Chapter 11 were made for USA Commercial Mortgage Co.; USA Capital Realty Advisors, LLC; USA Securities, LLC; USA Capital First Trust Deed Fund, LLC; and, USA Capital Diversified Trust Deed Fund, LLC.

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