Industry reports last week underscored concern by some CU executives that the sale hearing, originally set for Jan. 11, be delayed further to allow for a more favorable bid on the assets, thereby replacing the one offered by the East Coast group led by Falcon Investment Advisors, a private equity firm; Everest Insurance Holdings of Liberty Center, N.J.; and Sutton.

In court papers, Centrix seeks to sell to the Falcon Group for about $30 million. Falcon would trade more than $30 million in secured debt for control of Centrix' collection and payments-processing business on its $1.9 billion subprime auto loans. Everest, Centrix' insurer, will receive a 25% stake, and Sutton will get a 5% stake, Dow Jones reported.

For months, some CUs have argued privately that they are fearful of the case dragging on further, preferring instead to agree to terms laid down by Falcon/Everest.

At the same time, there have been other CUs that maintain the Centennial, Colo. firm is satisfactorily fulfilling its servicing and cash agreements and the U.S. Bankruptcy Court process should continue. Once the court completes the planned sale of assets, the CUs could more easily dispose of their portfolios without further losses.

Judge Brown on Jan. 4 cleared the way for the Jan. 18 postponement as court documents listed 109 CUs, many with sizable Centrix portfolios, as direct parties in the case. At year-end there were a reported 350 CUs with claims totaling $100 million.

The latest "Credit Union Negotiation Contact List" showed Centrix portfolios as small as $100,000 (FSU Credit Union) to $90 million (Mission Federal Credit Union).

Responding to a Credit Union Times query, a spokeswoman for the $2 billion Mission FCU in San Diego said simply, "we are working with NCUA on this but are concentrating now on our 2007 business planning. We are not looking backward."

At year-end, Mission FCU was reportedly forced to boost its reserve balance by more than $10 million because of loan delinquencies.

Mission, like other Centrix CUs, has strived during 2006 to sharply reduce delinquent loans. Its delinquent loans stood at $17 million as of Sept. 30, 2006, down from the $25.7 million at year-end 2005.

A December San Diego Business Journal article said that as of Sept. 30, Mission had a net loss of $3.5 million.

Though first brought into court in early September on an involuntary petition filed by three large non-CU vendors, Centrix filed its bankruptcy petition Sept. 19, but its problems stem directly from NCUA's Risk Alert, which some in the industry have called heavy-handed, putting the firm quickly in dire financial straits.

NCUA, however, has insisted it was simply prudent and necessary public policy to protect members.

Meanwhile, Centrix was forced to pink slip hundreds of employees dropping its payroll from a high of 1,500 down to 300 last year. It cut its loan underwriting from a $4 billion peak down to $1.9 billion at the time of the bankruptcy filing. It once claimed 300 financial institutions as partners.

Over the summer Sutton formally ended the firm's yearly sponsorship of the Centrix Grand Prix auto race in downtown Denver forcing organizers to find alternative financial backing.

Calls to Centrix' acting-Chief Operating Officer, Kevin Berry, executive vice president, were not returned.

Michael Richman, the lead New York attorney representing the Unsecured CU Creditors Committee, said that he was unaware of any opposition to the Jan. 18 sale "that will not be settled or resolved."

There were reports, however, of friction among the creditor CUs about payment of service fees by Centrix and the liability of CUs originating Centrix loans.

Richman said he had no knowledge of any new or threatened suits relating to Centrix. And on another point, Richman acknowledged that negotiations between the debtors and CUs had continued in recent weeks "over a new general portfolio servicing agreement that would govern the post-sale servicing of loan portfolios." –[email protected]