A Milwaukee judge could rule today on a state bankruptcy petition filed by Central States Mortgage Co., the Wauwatosa, Wis. CUSO, that abruptly halted mortgage originations and closed down operations March 9.

CSMC, owned by a coalition of 25 Wisconsin and Illinois CUs, serves 250 Midwest CUs. The CUSO was forced to shutter its business after Members United FCU, of Warrenville, Ill. called a defaulted $32.5 million fund loan two weeks ago, which followed a drawn-out court battle with CSMC's former management.

Separately, AmeriCU Mortgage, a Troy, Mich. firm, with CU clients, was named with approval of the Wisconsin Department of Financial Institutions to process CMSC existing mortgages.

In its filing last Friday for a voluntary Chapter 128 receivership, comparable to a federal bankruptcy petition, Central States' chairman Dean Wilson said the CUSO was taking the bankruptcy route "to protect customers, creditors and former employees by providing an orderly transition of our business."

The Chapter 128 filing in Milwaukee County Circuit Court represents a move toward "the orderly liquidation of a company and its assets under the supervision of a receiver," said Wilson. "The proceeding helps ensure that everyone involved is protected and treated as fairly as possible in the process."

Wilson said also CSMC "has worked diligently in recent weeks to ensure any pending mortgage applications have been processed and completed" adding "we are committed to helping as best as we can to resolve any outstanding issues. We have also been helped tremendously by a cooperative attitude from the Wisconsin Department of Financial Institutions and our four largest creditors all of whom have supported our move into voluntary receivership."

The four creditors were not named.