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Does Thornburg have another company on the way?

Until filing for bankruptcy in May, Thornburg Mortgage was among Santa Fe's largest employers [Cover story, April 8: "The House Thornburg Lost"].

Multiple sources now tell SFR Thornburg plans to start a new company, structured as a savings and loan or thrift.

That could mean a fresh start as a bank, with new government regulators. Partly because of its corporate structure, Thornburg Mortgage was ineligible for federal bailouts last year. (Thornburg Investment Management, a separate company, remains in business.)

A Thornburg representative did not confirm or deny plans for a new company. "It's just a rumor," Thornburg Mortgage spokeswoman Suzanne O'Leary Lopez says.

O'Leary Lopez, along with a number of other former Thornburg Mortgage employees, now works at an hourly rate as the bankruptcy proceeds. She promises an announcement "if I become a part of something that is formally going to happen."

Meanwhile, interesting details have emerged from the Thornburg Mortgage bankruptcy, which Fortune Magazine recently ranked the eighth-largest in US history, involving $36.5 billion in assets.

For instance, some top people at Thornburg made out well as bankruptcy became likely. A timeline of payments contained in court documents raises questions about when, exactly, Thornburg decided to call it quits.

Bankruptcy records show the first payment "related to debt counseling or bankruptcy" was made on July 21, 2008 to Venable LLP of Maryland. Venable had represented Thornburg since March of last year when Thornburg's day-to-day cash sources began to collapse.

It was not until March 17, 2009 that Thornburg Mortgage announced its own bankruptcy was possible. Thornburg also said it had hired two firms as "lead restructuring counsel" and "financial advisor" to help Thornburg consider "strategic alternatives."

The bankruptcy court documents show one firm, Houlihan Lokey LLP, began getting payments from Thornburg on Dec. 5, 2008. The other, Kirkland & Ellis LLP, got its first $1 million payment on March 11, 2009, followed by a $2 million payment two days later.

Any mystery about the company's future could have been cleared up by March 13, when Epiq Bankruptcy Solutions of Texas cashed its first check, for $25,000, from Thornburg Mortgage.

The announcement, four days later, made no mention of Epiq, saying only that Thornburg's "strategic alternatives…may also include the filing of a [bankruptcy] petition."

On April 1—19 days after its first payment to a "bankruptcy solutions" company—Thornburg Mortgage announced it did indeed "expect" to file.

Inside the company, there was little work left to do except close up shop; the nationwide mortgage market at the heart of its business was a smoldering wreck. But between the first payment to Epiq and the actual filing of the bankruptcy papers on May 1, Thornburg Mortgage paid $137,000 to certain directors for "board fees" and expense reimbursements.

Those directors were Thomas F Cooley, an economics professor at New York University; Ike Kalangis of Albuquerque, a banker appointed by Gov. Bill Richardson to the State Investment Council; former beverage company executive and Vanessie of Santa Fe owner Francis I Mullin III; Eliot R Cutler of Cape Elizabeth, Maine, who was associate director of the Office of Management and Budget under President Jimmy Carter; real estate developer David A Ater of Santa Fe; and Anne-Drue Miller Anderson of Santa Fe.

According to court papers, each got checks worth between $22,000 and $25,000 in Thornburg Mortgage's final weeks—much of it after the company gave layoff notices to 130 employees early in April.

That fits with what critics say was a Thornburg habit of delayed disclosure. Bankruptcy records show five lawsuits pending against Thornburg Mortgage. One class-action suit claims company executives and board members did not share information with investors in a timely fashion. Thornburg Mortgage denies those claims.

Some post-market crash expenses seem lavish. In September 2008, Thornburg Mortgage CEO Larry Goldstone claimed a $31,592 expense reimbursement for his use of Albuquerque-based ACCESS Concierge. That "luxury lifestyle management" company promises to "handle it all, including front row seats and spur of the moment chartered jets, to impossible-to-book theater tickets and dinner or nightclub reservations."

Accountants for Thornburg's creditors bill up to $600 an hour, court records show—but fly coach.

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