DENVER — The financial troubles of Centrix Financial, the indirect lender of subprime loans, culminated last week in a Chapter 11 bankruptcy filing in a Reno, Nev. court coming less than two weeks after the once high flying firm announced its sale to an East Coast investor group, which included its CEO, Robert Sutton.

The filing in Nevada comes amidst a fast-moving series of legal developments including a separate involuntary petition against Centrix brought by three large creditors, two of which are units of large banks. That petition seeks $3.4 million in unpaid claims.

Despite its mounting problems, Centrix officials insisted “nothing has changed and we will continue servicing” the firm’s 250 client CUs spread across the country. The firm has said since 1998 it has underwritten $4 billion of outstanding loans with CUs and banks.

Denver bankruptcy attorneys were quoted last week as saying the filing in Reno was extraordinary considering most of the company assets and remaining 400-plus employees are in Colorado.

Centrix officials did confirm that one of its newly formed subsidiaries, CMGN, apparently with leasing ties in the Nevada market, had filed a bankruptcy petition Sept. 4 in the Reno court. Further details on that filing were not available.

Meanwhile, there were fresh reports that the creditor group, which includes IFC Credit Corp, Suntrust Leasing and Wells Fargo Equipment Finance, had “withdrawn”, for the time being, its involuntary petition against Centrix though the actual documents remain before a U.S. Bankruptcy Court judge in Denver.

A Centrix spokeswoman, Lauren Baker, vice president of communications, earlier in the week had called the creditors’ petition “unfortunate” since its Reno petition was simply “part of the company’s previously announced intention” to sell the firm to a Boston investment group, Falcon Investment Advisors and Everest Reinsurance Holdings, headquartered in Liberty Center, N.J. Under that part of the deal, Sutton would become a minority shareholder in Centrix, but remain a director. Falcon was identified as the senior lender to Centrix with Everest, a subsidiary of a large Bermuda property and casualty holding firm, providing insurance coverage to Centrix.

In its formal release announcing the bankruptcy petition, Centrix said Sutton, who has been chairman and CEO of the firm since 1997, remains a “participant in the investor group.”

The release also said that “throughout the Chapter 11 process, Centrix will continue to maintain all of its loan servicing operations including providing third-party servicing for $1.9 billion in subprime auto loans previously undertaken by Centrix and owned by various credit unions and financial institutions.”

For months the financial troubles of Centrix have roiled CUs and forced the resignations of top executives at CUs hit by loan losses on Centrix paper. The firm, headquartered in suburban Centennial, had been hit hard in June 2005 by an NCUA risk alert on third-party subprime paper.

Denver media reports last week said Centrix lost $21.8 million in 2005, but had earned $14 million for the first six months of 2005 before the risk alert was issued. Losses in the second half rose to $35 million. According to a Denver Post report, the bankruptcy filing of the creditors made by an attorney for the group said the filing of the CMGN case “was done in an attempt to gain venue in Nevada for subsequent filings by Centrix and related entities in the state of Nevada, far away from creditors and lawsuits facing Centrix.” IFC and Suntrust were quoted as each being owed about $2.15 million with Wells Fargo owed $345,000.

A spokesman for Suntrust at the bank’s headquarters in Atlanta said it “would have no comment on that situation.”

Centrix reportedly has 20 days to respond to the bankruptcy filing in the Denver court, which was made Sept. 15. That would be the case unless that petition is “withdrawn” as sources indicated has occurred.

Centrix officials did acknowledge the number of employees has shrunk further “to 400 or 425″ from its high of 1,500 in early 2005. –