American Business Financial Services, Inc. – Indenture Trustees’ Distribution Company Logo
General Information Distribution to Holders
of Senior Collateralized Subordinated Notes
Background Information Regarding
the Senior Collateralized Subordinated Notes
and the ABFS Bankruptcy Proceedings
Related Information

General Information

This webpage is administered by Epiq Systems, Inc., as Distribution Agent for Law Debenture Trust Company of New York (“Law Debenture”) and Wells Fargo Bank, National Association (“Wells Fargo”), as Indenture Trustees (the “Indenture Trustees”), for the purpose of providing information to holders (the “Holders”) of certain Senior Collateralized Subordinated Notes issued by American Business Financial Services, Inc. (“ABFS”) in December 2003 and June 2004.


Notice of Distribution


Epiq previously mailed to Holders a Notice of Distribution, dated November 28, 2011 (the “Notice of Distribution”) along with certain required forms for completion.


To view a copy of the Notice of Distribution, please click here.


HOLDERS WHO FAILED TO SUBMIT THE REQUIRED FORMS TO EPIQ, POSTMARKED NO LATER THAN THE JANUARY 31, 2012 RESPONSE DATE, WILL NOT BE ELIGIBLE TO RECEIVE ANY DISTRIBUTION FROM THE INDENTURE TRUSTEES.


The Indenture Trustees are in the process of reviewing the forms submitted by Holders and making distributions. If the Indenture Trustees determine that there are any deficiencies in the forms you submitted by the Response Date, you will be notified in writing of the deficiencies, the actions required by you to cure the deficiencies, and a deadline for sending corrected forms and/or additional documentation to Epiq. Please be aware that the Indenture Trustees are not in a position at this time to determine the date(s) on which distribution checks will be sent to Holders eligible to receive a distribution who have not yet received a check with respect to any particular account or accounts. You can track the progress of this matter by visiting this website.


Are You a Holder of Senior Collateralized Subordinated Notes Issued by American Business Financial Services?

If you or someone in your family is a Holder of “Senior Collateralized Subordinated Notes” issued by ABFS, this webpage is relevant to you. To determine what type of ABFS notes you hold, you can check to see if you previously received any documentation (such as a note receipt or a transaction statement) from ABFS in connection with your purchase or rollover of your notes. The documentation should say “Senior Collateralized Subordinated Note,” and should identify the issuer as “American Business Financial Services, Inc.” If your documentation does not say that, it is possible that you are a holder of unsecured notes of ABFS.


To view a sample note receipt for a Senior Collateralized Subordinated Note, please click here.

IF YOU ARE A HOLDER OF ABFS UNSECURED NOTES, YOU MAY WISH TO CONTACT THE EPIQ CALL CENTER NUMBER ESTABLISHED BY U.S. BANK, NATIONAL ASSOCIATION, AS INDENTURE TRUSTEE FOR THE ABFS UNSECURED NOTES AT 646-282-2526.


Distribution to Holders of Senior Collateralized Subordinated Notes

The Distribution


Pursuant to the Distribution Order referenced below, the Indenture Trustees have established October 15, 2011 (the “Distribution Record Date”) as the record date for the upcoming distribution. Record owners of Senior Collateralized Subordinated Note Accounts as of the Distribution Record Date, as reflected on the Indenture Trustees’ securities registers, who submitted the Required Forms to the Distribution Agent postmarked no later than the January 31, 2012 Response Date, may be eligible to receive a distribution.


At the time that the Notice of Distribution was sent to Holders, the Indenture Trustees estimated that Holders of the December 2003 Senior Collateralized Subordinated Notes (the “2003 Notes”) would share, on a pro rata basis, in a distribution of approximately $10,159,551, and that Holders of the June 2004 Senior Collateralized Subordinated Notes (the “2004 Notes”) would share, on a pro rata basis, in a distribution of approximately $6,127,364. The Indenture Trustees estimated that Holders of the 2003 Notes would receive a distribution equivalent to approximately 17.8% of the amount of each Holder’s Account principal and interest outstanding as of the ABFS bankruptcy petition date of January 21, 2005 (the “Bankruptcy Petition Date”), and that Holders of the 2004 Notes would receive a distribution equivalent to approximately 14.0% of the amount of each Holder’s Account principal and interest outstanding as of the Bankruptcy Petition Date.


Subsequent to the entry of the Distribution Order and the Final Judgment Order, George Miller, the chapter 7 trustee for the ABFS bankruptcy estates (the “Chapter 7 Trustee”) received $17,500,000 in settlement proceeds (the “BDO Settlement Proceeds”) in connection with the Chapter 7 Trustee’s settlement of an arbitration proceeding brought against BDO Seidman, LLP (now known as BDO USA, LLP) (“BDO”). Pursuant to the terms of the Chapter 7 Trustee’s November 2007 settlement agreement with the Indenture Trustees, the Indenture Trustees were entitled to receive a distribution in the aggregate amount of $4,258,411 (the “BDO Distribution Amount”) on account of the Chapter 7 Trustee’s receipt of the BDO Settlement Proceeds. By motion filed November 18, 2011 (the “BDO Distribution Motion”) with the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”), the Chapter 7 Trustee sought the Bankruptcy Court’s authorization to distribute the BDO Distribution Amount to the Indenture Trustees. On December 6, 2011, the Bankruptcy Court entered an Order granting the BDO Distribution Motion.


The Chapter 7 Trustee distributed the BDO Distribution Amount to the Indenture Trustees in late December 2011. In light of these developments, the Indenture Trustees now estimate that Holders of the 2003 Notes will share, on a pro rata basis, in an additional distribution of approximately $2,408,131, and that Holders of the 2004 Notes will share, on a pro rata basis, in an additional distribution of approximately $1,850,280. Therefore, the total distribution to Holders of the 2003 Notes described in the Notice of Distribution has increased to 22.0% (instead of the 17.8% referenced above) of the amount of each Holder’s Account principal and interest outstanding as of the Bankruptcy Petition Date, and the total distribution to Holders of the 2004 Notes described in the Notice of Distribution has increased to 18.2% (instead of the 14.0% referenced above) of the amount of each Holder’s Account principal and interest outstanding as of the Bankruptcy Petition Date.


Accompanying the distribution check(s) mailed to Holders, the Indenture Trustees will provide a revised Account Information Statement including such Holder's pro rata share of the BDO Distribution Amount.


Notice of Distribution


Epiq previously mailed to Holders a Notice of Distribution, dated November 28, 2011 (the “Notice of Distribution”) along with certain required forms for completion.


To view a copy of the Notice of Distribution, please click here.


HOLDERS WHO FAILED TO SUBMIT THE REQUIRED FORMS TO EPIQ, POSTMARKED NO LATER THAN THE JANUARY 31, 2012 RESPONSE DATE, WILL NOT BE ELIGIBLE TO RECEIVE ANY DISTRIBUTION FROM THE INDENTURE TRUSTEES.


The Indenture Trustees are in the process of reviewing the forms submitted by Holders and makiing distributions. If the Indenture Trustees determine that there are any deficiencies in the forms you submitted by the Response Date, you will be notified in writing of the deficiencies, the actions required by you to cure the deficiencies, and a deadline for sending corrected forms and/or additional documentation to Epiq. Please be aware that the Indenture Trustees are not in a position at this time to determine the date(s) on which distribution checks will be sent to Holders eligible to receive a distribution who have not yet received a check with respect to any particular account or accounts. You can track the progress of this matter by visiting this website.


The Distribution Order entered by the Delaware Court of Chancery on March 10, 2011

On January 5, 2011, the Indenture Trustees filed a Verified Petition for Instructions (the “Petition”) with the Delaware Court of Chancery (the “Chancery Court”). The purpose of the Petition was to obtain the Chancery Court’s approval of a proposed distribution order (the “Proposed Distribution Order”) and distribution protocol (the “Distribution Protocol”). On March 10, 2011, the Chancery Court entered the Distribution Order (the “March 10, 2011 Distribution Order”) and approved the Distribution Protocol. On May 3, 2011, the Chancery Court entered an Order (the “May 3, 2011 Order”) amending certain provisions of the March 10, 2011 Distribution Order (the March 10, 2011 Distribution Order, as amended, hereinafter referred to as the “Distribution Order”) and approving certain modifications to the Distribution Protocol previously approved (the “Second Amended Distribution Protocol”). On September 14, 2011, the Chancery Court entered an Order concluding the Chancery Court proceedings (the “Final Judgment Order”) and deeming all orders previously entered by the Chancery Court in the matter as final. The time for filing an appeal of the Final Judgment Order has now expired, and the Final Judgment Order is, therefore, final and non-appealable.


To view a copy of the Petition, please click here.

To view a copy of the March 10, 2011 Distribution Order, please click here.

To view a copy of the May 3, 2011 order, please click here.

To view a copy of the Second Amended Distribution Protocol, please click here.

To view a copy of the Final Judgment Order, please click here.

The Distribution Order authorizes the Indenture Trustees to, among other things:

  1. Make distributions to Holders in the aggregate amounts set forth in the Distribution Order in accordance with the applicable terms of the Indentures and as provided in and/or modified by the Second Amended Distribution Protocol and the Distribution Order;
  2. Perform, in their capacities as Indenture Trustees, the function of Registrar under their respective Indentures;
  3. Amend the Securities Registers, from time to time, to reflect updated Holder information, and to rely upon the Securities Registers (as so amended) for distribution purposes, both with respect to the distributions described above and with respect to future distributions, if any;
  4. Transfer certain amounts from Wells Fargo to Law Debenture constituting an adjustment as between them of amounts distributed to them in the Bankruptcy Cases;
  5. Reserve certain amounts for payment of ongoing fees and expenses incurred by the Indenture Trustees; and
  6. Set a record date for distribution purposes as the date on which the Distribution Order (and any subsequent order(s) amending the Distribution Order) becomes final and non-appealable.

Pursuant to the Distribution Order and the Second Amended Distribution Protocol, the Indenture Trustees have reviewed certain purported transfers of Senior Collateralized Subordinated Note Accounts made by Holders and have recognized and accepted those transfers that the Indenture Trustees have determined are satisfactorily documented (the “Accepted Transfers”). As a result, the Indenture Trustees have amended the Securities Registers to reflect that buyers of such Accounts, and not the original Holders, are the record owners of those Accounts.


The Indenture Trustees have also determined that the documentation evidencing certain purported transfers of Senior Collateralized Subordinated Note Accounts is deficient in one or more respects (the “Rejected Transfers”). As a result, the Indenture Trustees have NOT recognized the transfer of an Account the transfer of which the Indenture Trustees deemed a Rejected Transfer, and the Securities Registers continue to reflect the original Holder, and not the purported buyer, as the owner of the Account. If you are the original Holder of such an Account, you should be aware that the purported buyer of your Account may be of the view that they have contract-based or other claims against you for any amounts you may receive as a distribution from the Indenture Trustees. The Indenture Trustees cannot provide you with any legal or other advice in connection with these situations and encourage you to seek advice from your own advisors, if needed.


If you have any questions regarding the Accepted Transfers, the Rejected Transfers or regarding any notice received from the Indenture Trustees, you may contact Epiq’s ABFS Call Center at 877-810-7250. Please have the necessary identifying information for your Account available when you call.



The Indenture Trustees’ Distribution Agent

To assist with various aspects of the Noteholder Distribution, the Indenture Trustees have retained Epiq Systems, Inc. to act as Distribution Agent.


Tax Matters

The Indenture Trustees make no representations and offer no advice with regard to state or federal tax implications of ABFS’s bankruptcy or any distribution. Holders should consult with their own tax professionals.


Address Changes

If you have moved since January 1, 2005, and have not already provided such new address information on a Substitute Form W-9 sumitted to Epiq, please send a written notice to Epiq at the following address and provide us with your account number(s), the old address and the new address:


IF DELIVERED BY MAIL:
Epiq Bankruptcy Solutions, LLC (ABFS matter)
FDR Station, P.O. Box 5015
New York, NY 10150-5015
IF DELIVERED BY HAND OR OVERNIGHT COURIER:
Epiq Bankruptcy Solutions, LLC (ABFS matter)
757 Third Avenue, 3rd Floor
New York, NY 10017

For all other Holder information updates (such as name changes, death of a Holder, etc.), please send written notification of such information updates, together with certified copies, with raised seals (do not send originals), of all relevant documentation to Epiq at the address shown above.


ABFS’s Bankruptcy Cases

Until its bankruptcy filing in January 2005, ABFS operated as a financial services company that originated, sold and serviced mortgage loans. On January 21 and 25, 2005, ABFS and certain of its affiliates (collectively, the “Debtors”) filed a voluntary petition (the “Bankruptcy Petition”) in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) for relief under Chapter 11 of the United States Bankruptcy Code.


To view the Bankruptcy Petition, please click here.


Following their bankruptcy filing, the Debtors attempted unsuccessfully to reorganize their businesses. In April 2005, the Debtors determined to wind down their operations and dispose of their assets. On May 17, 2005, the Bankruptcy Court entered an order (the “Conversion Order”) granting the Debtors’ Motion to convert their Chapter 11 bankruptcy cases to cases under Chapter 7 of the Bankruptcy Code (the “Conversion Motion”). George Miller is the Chapter 7 Trustee of the Debtors’ Chapter 7 estates (the “Chapter 7 Trustee”). The Debtors’ Chapter 7 bankruptcy cases remain pending before the Bankruptcy Court.


To view the Conversion Motion, please click here.


To view the Conversion Order, please click here.


To view a brief description of the difference between a Chapter 11 proceeding and a Chapter 7 proceeding, please click here.


The 2003 and 2004 Indentures

ABFS funded its mortgage lending operations, in part, by the sale of debt securities to individual investors, at first through underwriters, but later on directly to investors through newspaper advertisements, direct mail and sales calls. ABFS initially issued these debt securities on an unsecured basis. In 2003, and again in 2004, ABFS offered to its unsecured noteholders the opportunity to exchange their unsecured notes for preferred stock of the company and Senior Collateralized Subordinated Notes (the “Senior Collateralized Subordinated Notes”) secured by an interest in certain residual cash flows known as interest-only strips.


Law Debenture is the successor trustee under an Indenture dated as of December 31, 2003 (the “2003 Indenture”), pursuant to which ABFS issued the 2003 Senior Collateralized Subordinated Notes (the “2003 Senior Collateralized Subordinated Notes”).


To view the 2003 Indenture, please click here.


Wells Fargo is the successor trustee under an Indenture dated as of June 30, 2004 (the “2004 Indenture”), pursuant to which ABFS issued the 2004 Senior Collateralized Subordinated Notes (the “2004 Senior Collateralized Subordinated Notes”). Collectively, the 2003 Senior Collateralized Subordinated Notes and the 2004 Senior Collateralized Subordinated Notes are referred to as the “Senior Collateralized Subordinated Notes”.


To view the 2004 Indenture, please click here.


Claims Made Against the Debtors’ Estates Under the Indentures and the Senior Collateralized Subordinated Notes

In August 2005, the Indenture Trustees each filed proofs of claim (the “Master Proofs of Claim”) in respect of the 2003 Senior Collateralized Subordinated Notes and the 2004 Senior Collateralized Subordinated Notes, respectively, asserting secured claims against the Debtors’ estates in the combined amount of $100,837,709, plus post-petition interest and other unliquidated amounts.


To view the proof of claim filed in the ABFS bankruptcy case by Law Debenture relating to the 2003 Senior Collateralized Subordinated Notes, please click here.


To view the proof of claim filed in the ABFS bankruptcy case by Wells Fargo relating to the 2004 Senior Collateralized Subordinated Notes, please click here.



The Indenture Trustees’ Settlement Agreement with the Chapter 7 Trustee

Following the litigation of various claims and causes of action between the Indenture Trustees, on the one hand, and the Chapter 7 Trustee, on the other, in November 2007, the Indenture Trustees and the Chapter 7 Trustee entered into a Settlement Agreement (the “Settlement Agreement”) resolving all of the pending disputes between them. On December 19, 2007, the Bankruptcy Court entered an Order approving the Settlement Agreement (the “Settlement Order”).


To view a copy of the Settlement Agreement, please click here.


To view a copy of the Settlement Order, please click here.


The Settlement Agreement also provided for the treatment of the claims and liens asserted by the Indenture Trustees in the Master Proofs of Claim and the asset sources that would fund the claims allowed under the Settlement Agreement. The Settlement Agreement granted to the Indenture Trustees two separate allowed claims against the Debtors’ estates (the “Allowed Claims”): (i) an unsecured super-priority administrative claim against the Debtors’ estates in the aggregate amount of $40 million, and (ii) a general unsecured claim against the Debtors’ estates in the aggregate amount of $58,149,685. There is no guarantee that the Indenture Trustees will actually receive these amounts from the Chapter 7 Trustee. These amounts are the maximum amounts that the Indenture Trustees could ever possibly recover from the Debtors’ estates under the Settlement Agreement on account of the Allowed Claims.


The Effect of the Settlement Agreement on the Master Proofs of Claim

Under the Settlement Agreement, the Allowed Claims were substituted for the claims asserted by the Indenture Trustees in the Master Proofs of Claim. Therefore, the Master Proofs of Claim are no longer relevant in determining any amounts owed to the Indenture Trustees by the Debtors’ estates. All amounts due to the Indenture Trustees are to be paid on account of the Allowed Claims by the Chapter 7 Trustee in accordance with the terms of the Settlement Agreement. The Allowed Claims may not be paid in full. Future distributions to Holders of the Senior Collateralized Subordinated Notes will depend on recoveries realized by the Chapter 7 Trustee from various pending legal proceedings and asset sales, if any.


The Chapter 7 Trustee’s Omnibus Claims Objection

The Chapter 7 Trustee has posted on his website information (including a list of individual proofs of claim) regarding an omnibus claims objection (the “Chapter 7 Trustee’s Omnibus Claims Objection”) he filed on November 2, 2011 in the Bankruptcy Court. If you are a Holder of Senior Collateralized Subordinated Notes and your individual proof of claim is listed on the Chapter 7 Trustee’s website within “Exhibit ‘A’ Duplicative Claims Exhibit,” this does not mean that you will not receive a distribution on account of your Senior Collateralized Subordinated Notes. The Chapter 7 Trustee’s Omnibus Claims Objection is designed to avoid payment of duplicative claims. On December 7, 2011, the Bankruptcy Court entered an Order sustaining the Chapter 7 Trustee’s Omnibus Claims Objections.


To view a copy of the notice of Chapter 7 Trustee’s Omnibus Claims Objection, please click here.


To view a copy of the Chapter 7 Trustee’s Omnibus Claims Objection, please click here.


To view a copy of the Chapter 7 Trustee’s Exhibit “A” Duplicative Claims Exhibit, please click here.


To view a copy of the Order of the Bankruptcy Court sustaining the Chapter 7 Trustee’s Omnibus Claims Objection, please click here.


The Indenture Trustees have filed master proofs of claim on behalf of the Holders of Senior Collateralized Subordinated Notes and have entered into a settlement with the Chapter 7 Trustee that provides for distributions to be paid to the Indenture Trustees, on account of such master proofs of claim, for the benefit of the Holders of Senior Collateralized Subordinated Notes. Therefore, expungement (elimination) of an individual proof of claim filed directly by a Holder of Senior Collateralized Subordinated Notes will have no effect on such Holder’s eligibility to receive his pro rata share of funds distributed to the Indenture Trustees by the Chapter 7 Trustee.


Amounts Received by the Indenture Trustees from the Debtors' Estates

During the pendency of the Chapter 11 portion of the ABFS bankruptcy cases, the Debtors made a total of $600,000 in “adequate protection” payments to the Indenture Trustees pursuant to an Order of the Bankruptcy Court to reimburse certain fees and expenses incurred by the Indenture Trustees in the early months of the bankruptcy cases. The Indenture Trustees applied such payments to the partial payment of outstanding fees and expenses incurred by each of them in the early weeks of the bankruptcy cases.


Through December 2011, the Indenture Trustees have received the following distributions from the Chapter 7 Trustee pursuant to the terms of the Settlement Agreement. Each of these distributions were divided as between the Indenture Trustees:


  1. December 2008 - $2,677,646.51;

  2. September 2009 - $2,733,400.93;

  3. January 2010 - $27,767,972.76; and

  4. December 2011 - $4,258,411.00


Pursuant to the Indenture Trustees’ charging liens and contractual rights of priority under the Indentures, the Indenture Trustees have applied certain amounts from the distributions to the payment of their outstanding fees and expenses incurred as Indenture Trustees, including the fees and expenses of their attorneys and advisors. The Indenture Trustees continue to accrue fees and expenses under their respective Indentures, including the fees and expenses of their attorneys and advisors. Accordingly, the Indenture Trustees have established reserves for payment of those fees and expenses. Since January 2010, the Indenture Trustees have paid these fees and expenses on a current basis.


Future Distributions to Holders of Senior Collateralized Subordinated Notes

The Indenture Trustees may receive in the future additional distributions from the Chapter 7 Trustee pursuant to the Settlement Agreement. Whether such distribution(s) is/are made will depend on the claims allowed under the Settlement Agreement, the net proceeds of any assets available for distribution from the Debtors’ estates, and the outcome of certain litigations brought by the Chapter 7 Trustee and now pending against various parties.


Completion of Chapter 7 Trustee’s Arbitration Proceeding Against BDO

Subsequent to the entry of the Distribution Order and the Final Judgment Order, George Miller, the chapter 7 trustee for the ABFS bankruptcy estates (the “Chapter 7 Trustee”) received $17,500,000 in settlement proceeds (the “BDO Settlement Proceeds”) in connection with the Chapter 7 Trustee’s settlement of an arbitration proceeding brought against BDO Seidman, LLP (now known as BDO USA, LLP) (“BDO”). Pursuant to the terms of the Chapter 7 Trustee’s November 2007 settlement agreement with the Indenture Trustees, the Indenture Trustees were entitled to receive a distribution in the aggregate amount of $4,258,411 (the “BDO Distribution Amount”) on account of the Chapter 7 Trustee’s receipt of the BDO Settlement Proceeds. By motion filed November 18, 2011 (the “BDO Distribution Motion”) with the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”), the Chapter 7 Trustee sought the Bankruptcy Court’s authorization to distribute the BDO Distribution Amount to the Indenture Trustees. On December 6, 2011, the Bankruptcy Court entered an Order granting the BDO Distribution Motion. The Chapter 7 Trustee distributed the BDO Distribution Amount to the Indenture Trustees in late December 2011.


Settlement Checks Received From Heffler, Radetich & Saitta LLP

You may have already received a check regarding ABFS from the law firm of Heffler, Radetich & Saitta LLP (“Heffler”). It is the Indenture Trustees’ understanding that the check you received represents a distribution of settlement proceeds from a class action lawsuit brought on behalf of ABFS noteholders against former directors and officers of ABFS. The Indenture Trustees were not involved in any way with this class action lawsuit. Heffler is acting as claims administrator in connection with this distribution. For more information, please visit Heffler’s informational website at http://www.hrsclaimsadministration.com or call Heffler at 215-665-8870 or 856-727-3322


How to Obtain More Information

If you need more information, you should contact Epiq’s ABFS call center at 877-810-7250, Mondays through Fridays, except holidays, between the hours of 8:00 A.M. and 6:00 P.M., Eastern time. From time to time in the future, updated information and notices concerning this and any future distribution may be posted on this web page.


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