Impac Mortgage Holdings - Chapter 11 Case Summary

Business Description

Headquartered in Irvine, California, Impac Mortgage Holdings, Inc. ("Impac"), together with its affiliated Debtors (collectively, the "Debtors" or the "Company"), is a residential mortgage business that has repositioned itself solely as a mortgage broker following a multi-year operational restructuring.

• The Debtors were historically engaged in (i) mortgage lending across retail, wholesale, and correspondent channels, (ii) long-term mortgage portfolio investments, including residual interests, and (iii) servicing and master servicing related to the Debtors' portfolios.
• Currently, and as of the Petition Date, the Debtors are focused exclusively on their mortgage broker business, having wound down the primary channels of their lending and servicing operations.
• Most recently, the Debtors entered into a secondment relationship with a technology firm to develop and enhance mortgage loan origination software (the "Business Plan"), which the Debtors intend to use internally to increase the efficiency of their own loan originations and/or to license to other loan origination companies.

The Debtors possess substantial Tax Attributes, including estimated federal net operating loss carryforwards ("NOLs") of at least $850 million and California NOLs of at least $600 million as of December 31, 2025, based on the Debtors' audited financial statements, with estimates remaining substantially similar as of the Petition Date.

As of the Petition Date, the Debtors employed a total of 18 full-time employees, with approximately 10 employed by Impac and 8 employed by Debtor Impac Mortgage Corp. ("IMC"), reflecting staff reductions undertaken throughout 2023 and 2024 as part of the Debtors' operational restructuring.

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Corporate History

Impac was formed in 1995 as a real estate investment trust ("REIT") and became a publicly traded company that same year.

• Following the onset of the subprime real estate crisis that began in 2007, Impac revoked its REIT status and transitioned into a nationwide independent residential mortgage lender that originated, sold, and serviced residential mortgage loans.
• Specifically, the Debtors originated:
  • Non-qualified residential mortgages;
  • Conventional residential mortgage loans intended for sale to U.S. government-sponsored enterprises ("GSEs"), including the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac"); and
  • Government-insured residential mortgage loans eligible for securitization through the Government National Mortgage Association ("Ginnie Mae").
• In addition, the Debtors operated as master servicer on their historical mortgage-backed securitization portfolio and held residual interests in such long-term mortgage portfolios.

COVID-19 Disruption and Operational Reset

• As of the beginning of 2020, the Debtors' business consisted of three main channels: (a) mortgage lending (retail, wholesale, and correspondent); (b) long-term mortgage portfolio investments, including residual interests; and (c) servicing and master servicing related to the Debtors' portfolios.
• Beginning in early 2020, the onset of the COVID-19 pandemic produced dislocation in the financial markets and triggered severe liquidity challenges across each of these channels.
• The Debtors temporarily ceased loan originations in early 2020 while continuing to satisfy obligations under their warehouse loan agreements, before slowly rebuilding the retail and wholesale lending channels through 2021 and into early 2022.

Rising Interest Rates and Strategic Repositioning

• From February 2022 through October 2023, the Federal Reserve Board increased short-term interest rates 11 times, reaching their highest level in 22 years, which—together with related circumstances—prompted the Debtors to reposition themselves solely as a mortgage broker business rather than a lender.
• During the latter half of 2022 and the first quarter of 2023, the Debtors implemented a series of initiatives to reduce operating expenses and funded debt tied to mortgage originations and servicing, including winding down the primary channels of the Debtors' business outside of the mortgage broker line.

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Operations Overview

The Debtors currently operate as a mortgage broker business, supported by a streamlined corporate structure and a small, specialized workforce centered at the Debtors' Irvine, California headquarters.

Corporate Structure

Debtor Impac sits at the top of the organizational structure and directly owns 100% of the equity interests in five Debtor subsidiaries, with additional Debtor entities held indirectly:

• Impac Funding Corporation ("IFC"): Wholly owned by Impac. IFC, in turn, owns 100% of the equity interests in:
  • Impac Commercial Capital Corporation; and
  • Impac Secured Assets Corp.
• Copperfield Financial, LLC ("CFLLC"): Wholly owned by Impac, and owns a 100% equity interest in Copperfield Capital Corporation ("CCC").
• Integrated Real Estate Service Corp. ("IRES"): Wholly owned by Impac. IRES owns 100% of the equity interests in:
  • Impac Mortgage Corp. ("IMC");
  • Impac Warehouse Lending, Inc.; and
  • Synergy Capital Mortgage Corp.
• IMH Assets Corp.: Wholly owned by Impac.
• Impac Warehouse Lending Group, Inc.: Wholly owned by Impac.

Workforce

As of the Petition Date, the Debtors employ 18 full-time employees, all of whom were retained for their specialized skills and central role in supporting the Debtors' efforts to rapidly emerge from chapter 11 in accordance with their proposed Plan and exit strategy.

• Approximately 10 employees are employed by Debtor Impac, and 8 employees are employed by Debtor IMC.
• Employees fill roles across corporate and administrative functions, accounting/finance, legal, information technology, and loan processing and loan agent functions, and include two upper-level management personnel.
• The Debtors are not party to any collective bargaining agreements and have not sponsored any defined benefit pension or retiree medical benefit plans.

Business Plan and Technology Initiative

Continuing the Debtors' historical entrepreneurial approach, the Debtors recently entered into a secondment relationship with a technology firm to develop and enhance mortgage loan origination software. The resulting platform is intended to improve the efficiency of the Debtors' own loan originations and/or be licensed to other loan origination companies as part of the Business Plan.

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Prepetition Obligations

The Debtors’ prepetition capital structure consists of three tranches of secured debt—the Prepetition Bridge Note, the Prepetition Loan, and the Life Insurance Loan Guaranty/Surety Bond Obligations—as well as unsecured Junior Subordinated Notes and other general unsecured claims. Impac’s equity is comprised of Common Stock, Preferred D stock, and Warrants.

Secured Debt

• Prepetition Bridge Note: Approximately $2 million in outstanding principal, plus accrued interest and fees, is owed under a Secured Promissory Note dated January 26, 2026, with Hildene Re SPC, Ltd. (acting on behalf of SP 1) serving as Bridge Note Lender, Plan Sponsor, and Prepetition Lender.
  • Hildene became the lender by way of an Assignment and Assumption Agreement dated April 20, 2026, under which its subsidiary Trinity Park, LLC assigned the note to Hildene.
  • The note bears interest at 12% per annum, with all principal and interest due on the earlier of January 26, 2027, or the date the obligations are rolled up on a cashless basis into a senior secured DIP financing facility under Section 364 of the Bankruptcy Code.
  • The first draw occurred in late January 2026, providing liquidity to finalize RSA negotiations, prepare for the Chapter 11 filing, and fund operations through the Petition Date.
  • The note is secured by liens on substantially all assets of each Debtor party thereto (the “Bridge Loan Collateral”), ranking pari passu with the senior liens securing the Prepetition Loan.
• Prepetition Loan: Approximately $23.95 million was outstanding as of March 31, 2026 under a $20 million revolving facility extended by Hildene, as Prepetition Lender, pursuant to a Loan Agreement dated May 6, 2024.
  • Impac is the borrower, and substantially all of its direct and indirect subsidiaries (excluding certain securitization SPEs) serve as guarantors. IMH Assets Corp. and Impac Secured Assets Corp. are not guarantors.
  • The facility bears interest monthly at SOFR plus 7.5%, compounded quarterly, unless Impac elects to pay interest in cash on a timely basis.
  • The loan is secured by pledges of substantially all assets of Impac and the Prepetition Loan Guarantors, ranking pari passu with the Prepetition Bridge Note. The collateral package is supported by a Security Agreement, subsidiary share pledges, a Trademark Security Agreement, and UCC-1 filings.
  • A portion of the proceeds was used to repay outstanding Convertible Promissory Notes held by RHP Trust (~$2.875 million) and Vintage Trust II (~$2.125 million), with the remaining balances under those notes satisfied in full on December 30, 2024.
  • Impac has from time to time obtained covenant default waivers from the Prepetition Lender.
• Life Insurance Loan Guaranty/Surety Bond Obligations: Approximately $16.4 million is outstanding under three amended and restated promissory notes (the “Enterprise Loans”) in favor of Enterprise Bank & Trust, each dated April 30, 2023 and maturing April 30, 2026.
  • Impac is obligor solely as trustee. The loans financed the acquisition and premium obligations of three life insurance policies issued by Allianz Life Insurance Company of North America, held by underlying trusts of which Impac serves as trustee and sole beneficiary.
  • Accrued interest is rolled into principal quarterly. Impac executed a Continuing Limited Guaranty Agreement dated January 31, 2012 in favor of Enterprise.
  • The Enterprise Loans are secured by a collateral assignment of the Life Insurance Policies and cash collateral held in restricted accounts (the “EB&T Pledged Accounts”), which also secure obligations under an irrevocable standby letter of credit supporting surety bonds issued by Liberty Mutual Insurance Company.
  • The insured parties are former Impac executives. The Life Insurance Policies have an estimated cash surrender value of approximately $15 million, and the EB&T Pledged Accounts hold approximately $2.74 million in cash plus accrued interest. Together, the collateral leaves Enterprise oversecured by approximately $1.4 million.

Junior Subordinated Notes

• Approximately $76.354 million remains outstanding as of the Petition Date under Junior Subordinated Indentures dated May 8, 2009, with Bank of New York as indenture trustee, maturing March 30, 2034.
  • The notes originated from a 2009 exchange of $51.3 million of trust preferred securities (issued in 2005) for $62 million of interest-only Junior Subordinated Notes carrying lower interest rates. A further $8.4 million of trust preferred securities was exchanged in 2017 for 412,264 shares of Common Stock.
  • The notes accrue interest at SOFR plus 375 bps (the “Floating Rate”), plus additional default interest equal to the Floating Rate. As of December 31, 2025, the stated principal balance was $62 million, plus accrued interest.
  • The Debtors defaulted in January 2024 by failing to make a required interest payment, prompting a Forbearance Agreement dated January 31, 2024 with HCMC III, LLC, as collateral manager. The agreement has been amended multiple times, with a current termination date of June 1, 2026.
  • The beneficial holders—Taberna Preferred Funding I, Ltd. and Taberna Preferred Funding II, Ltd.—are under common control with the Plan Sponsor and are signatories to the RSA.

Unsecured Debt

• Excluding the Junior Subordinated Notes, the Debtors carry approximately $1.0 million in total unsecured debt, the majority of which consists of disputed, unliquidated, or contingent claims, including amounts owed to vendors, cost report payables, and potential repurchase or indemnification obligations.
• The repurchase exposure stems from the Debtors’ historical mortgage lending business, under which they made customary representations and warranties on loans funded and sold into the secondary market. Breaches may require repurchase of affected loans or indemnification of investors and insurers, with potential mitigation from loan liquidation proceeds or recourse against originating correspondent lenders.
• Indemnification obligations may also arise on early loan payoffs or early defaults, requiring repayment of premiums initially paid by investors or lenders. Under GAAP, the estimated repurchase and/or indemnification liability reflected on the Debtors’ books as of December 31, 2025 was $3,056,878.
  • None of the Debtors’ ten largest historical mortgage loan counterparties had any outstanding repurchase demands, and the Debtors believe their actual exposure is nominal, if any.

Equity

• Impac’s outstanding equity consists of Common Stock, 8.25% Series D Cumulative Redeemable Preferred Stock (“Preferred D”), Warrants to purchase Common Stock, and outstanding equity awards, including stock options, under Impac’s equity incentive plans.
  • The Common Stock trades over-the-counter on the OTC Marketplace under the symbol “IMPM.” Impac was delisted from the NYSE-American and subsequently de-registered from SEC reporting requirements in mid-2023.
  • The Preferred D and Warrants were issued in connection with an Offer to Exchange and Consent Solicitation that closed in October 2022, converting the previously outstanding 9.375% Series B and 9.125% Series C Cumulative Redeemable Preferred Stock into newly issued Common Stock and cash (or Preferred D where cash was not permissible) and Warrants.

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Events Leading to Bankruptcy

Historical Challenges

• The Debtors entered the chapter 11 process burdened by a series of legacy issues that compounded over more than a decade, ultimately constraining their ability to raise capital, sustain margins, and weather subsequent macroeconomic shocks.

Protracted Litigation and Capital Raise Constraints

• In 2009, Impac launched an exchange offer to amend the terms of its Preferred B and Preferred C Articles of Incorporation. In late 2011, certain preferred shareholders commenced litigation challenging the offer, and the dispute remained unresolved until early 2023, when it was ultimately adjudicated in the plaintiffs’ favor.
  • While the litigation was pending, the Debtors were severely constrained in their ability to issue equity or pursue other capital raises.
  • The inability to negotiate a settlement with the plaintiffs also derailed several potential M&A transactions.
  • Compounding the strain, interest payments on Impac’s floating-rate Junior Subordinated Notes climbed materially from 2021 through 2023 as rates rose, and the Debtors’ weakened financial position and counterparty credit risk profile prevented them from entering into swap or hedging arrangements to mitigate that exposure.

CashCall Mortgage Transaction and GSE Relationship

• In 2015, IMC acquired the assets of residential consumer lender CashCall Mortgage from CashCall Inc. under a three-year earn-out structure that largely allowed the founder of CashCall Mortgage to operate the lending platform at his sole discretion.
  • In 2016, a surge in refinance activity tied to the BREXIT bond market rally pushed prepayment speeds to levels Fannie Mae deemed unacceptable, damaging the Company’s relationship with the agency. Impac’s then-CEO voluntarily suspended loan delivery to Fannie Mae, leaving Freddie Mac as the Company’s sole direct GSE takeout.
  • In July 2020, at the onset of the COVID-19 refinance cycle, Freddie Mac suspended Impac’s ability to sell loans directly, citing concerns over potential prepayment speeds—despite substantial business model changes from 2016 to 2020 that had brought Impac’s prepay speeds in line with industry peers.
  • Forced to redirect loan sales to aggregators, Impac absorbed an additional layer of execution that compressed margins, reduced income per loan, and slowed the velocity of its origination cycle—placing significant stress on capital and liquidity, particularly given longer dwell times and elevated outstanding balances on warehouse facilities.

COVID-19 Impact and Balance Sheet Deleveraging

• The onset of the COVID-19 pandemic in the first quarter of 2020 prompted the Debtors to temporarily cease all lending operations and furlough the majority of their workforce.
• To reduce risk and right-size the balance sheet, the Debtors executed a series of deleveraging actions, all while satisfying in full every obligation under their warehouse facilities and forward sale arrangements:
  • Sold $4.2 billion in unpaid principal balance of Freddie Mac mortgage servicing rights.
  • Reduced warehouse lending capacity from $1.7 billion at the start of 2020 to $600 million by year-end, materially shrinking exposure to warehouse borrowings and capital markets activity tied to loans held for sale.

Strategic Repositioning and Business Line Wind-Downs

• The Debtors implemented a broader portfolio reset to align with diminished market opportunities and reduce overhead:
  • Mortgage Broker Repositioning: At the end of 2022 and into 2023, the Debtors transitioned the CashCall Mortgage division from a direct lender to a mortgage broker model.
  • Wholesale Wind-Down: In Q1 2023, the Debtors wound down their wholesale lending channel after volume collapsed amid rate volatility and credit risk pressures.
  • Servicing Rights Divestiture: In December 2022, the Debtors sold their remaining Ginnie Mae residential mortgage loan servicing rights portfolio—approximately $68 million in unpaid principal balance—for roughly $725,000.
  • Sale of Long-Term Mortgage Portfolio Residuals: In March 2022, the Debtors sold their residual interests for $37.5 million, deleveraging the balance sheet by approximately $1.6 billion in both assets and liabilities.
  • Real Estate Services Wind-Down: The Debtors wound down their real estate services segment, which had since 2008 provided master servicing, loss mitigation, default surveillance, loan modification, short sale services, REO oversight, and reporting services for residential and multifamily mortgage portfolios.

Real Estate Footprint Reduction

• Reflecting a shift to hybrid and remote work, the Debtors materially reduced their commercial office footprint:
  • In January 2023, the Debtors negotiated an early termination of their 120,000-square-foot legacy office lease, paying the landlord $3 million in lieu of approximately $8.8 million in remaining commitments, and relocated to a 19,000-square-foot space at an average rent of $1.35 per square foot, totaling approximately $800,000 inclusive of CAM charges through July 31, 2025.
  • Upon expiration of that lease, the Debtors further downsized to approximately 6,000 square feet under a new lease effective July 28, 2025, running through September 30, 2028, at an average annual rent of $217,000 ($18,000 per month) over the 38-month term.

Post-Pandemic Strategic Initiatives and Funded Debt Servicing

• Despite the cost-reduction and repositioning efforts, revenues and margins failed to keep pace with the Debtors’ reduced expense base.
• The Debtors continued to service their funded debt obligations, including:
  • $62 million of Junior Subordinated Notes; and
  • Convertible Promissory Notes originally issued in April 2013 in the principal amount of $25 million, which had been amended down to approximately $10 million by year-end 2023 through extensions and principal installment payments.

Liquidity Crisis and Prepetition Loan

• By 2023, the Debtors were left with minimal liquidity to fund operations or service debt, prompting a comprehensive review of capital raise, M&A, and chapter 11 alternatives.
  • The Debtors successfully executed the Prepetition Loan, which provided working capital to support the mortgage broker business and reduce the outstanding Convertible Promissory Notes balance.
• Throughout 2024 and 2025, the mortgage business remained constrained as interest rates held at elevated levels.
  • In November 2024, the Debtors received working capital funds tied to an Employee Retention Tax Credit (the “ERTC”) originally applied for in 2023. A portion of the ERTC proceeds was used to pay off the Convertible Promissory Notes in full in December 2024—ahead of the May 2025 maturity—with the early payment penalty waived through negotiation. Remaining ERTC funds were applied to working capital.

Path to Chapter 11 and Restructuring Support Agreement

• Although the Debtors entered into a series of consents and waivers in connection with breached financial covenants, the Prepetition Loan was fully drawn by July 2025, leaving them once again with minimal liquidity to fund operations or service debt.
• The Debtors reopened their evaluation of chapter 11 alternatives and commenced negotiations with key stakeholders on a potential reorganization.
  • In January 2026, the Debtors secured an additional, limited working capital line through the Prepetition Bridge Note.
  • On April 22, 2026, the Debtors entered into the Restructuring Support Agreement (the “RSA”) with the Prepetition Lender, contemplating a recapitalization through a prepackaged chapter 11 plan supported by the Prepetition Lender and holders of 100% of the Junior Subordinated Notes.

Restructuring Framework and DIP Financing

• The Restructuring is designed to restructure the Prepetition Loan, address other funded debt, provide a recovery to holders of Allowed General Unsecured Claims, stabilize the business, and preserve valuable tax attributes—including net operating loss carryforwards and regulatory licenses. Absent the RSA transactions, the likely alternative is liquidation with minimal or no recoveries.
• Key components of the proposed Plan include:
  • The Prepetition Lender will serve as Plan Sponsor and exchange its debt for 100% of the equity in Reorganized Impac.
  • A debtor-in-possession term loan facility (the “DIP Facility”) provided by the Plan Sponsor will fund operations and case administration, with the outstanding Prepetition Bridge Note rolled up into the DIP Facility upon entry of the interim order.
  • On the Plan’s effective date, the DIP Facility will be refinanced through an exit facility provided by the Plan Sponsor, supplying post-emergence working capital and payment of Allowed Administrative, Priority, and Other Secured Claims.
  • Holders of Junior Subordinated Notes will receive unsecured contingent payment certificates tied to Reorganized Impac’s performance, with a minimum payment of $250,000 and a maximum payment of $5,000,000.
  • The Plan also establishes a fund of up to $300,000 for Allowed General Unsecured Claims and a market-based management incentive plan.
• The RSA—the product of arm’s-length negotiations—includes customary milestones, including confirmation within 45 days and effectiveness within 60 days of the Petition Date, which the Debtors believe are achievable given prepetition solicitation and broad stakeholder support.