Oak Street Mortgage slides into bankruptcy

Scott Olson
June 8, 2007
Back to TopCommentsE-mailPrintBookmark and Share

Carmel-based Oak Street Mortgage, which not long ago was a high-flier poised to go public, filed for Chapter 11 bankruptcy this morning in federal court.

Oak Street in December sold most of its assets to Kansas City, Mo.-based Novastar Financial Inc. amid a meltdown of the sub-prime mortgage market. Subprime lenders like Oak Street make loans to customers with shaky credit.

The Carmel company still has a financial interest in loans it made prior to the sale. Under the supervision of bankruptcy court, Oak Street will repay creditors based on how they perform.

Founded in 1999 by former Bank One executive Steve Alonso and others, Oak Street rode a red-hot housing market to become central Indiana's fastest-growing private company in 2003, according to IBJ research. The next year, it registered for a $150 million initial public offering, a plan it later tabled.

A slumping housing markets, tough competition and other factors led Oak Street to sell its assets.

"You learn that you can't overcome a market when it is devaluing so quickly," Alonso said. "We got to a point where we were negotiating with creditors."

At its peak, Oak Street employed 700 people, 500 of whom remained at the time of the sale. Alonso said the sale enabled employees to keep their jobs with the new owner.

Detailed information on Oak Street's assets and liabilities was not immediately available.

Many of the nation's subprime lenders have filed for bankruptcy protection in recent months.

Today's bankruptcy filing does not involve Carmel-based Oak Street Funding, which is under separate ownership and continues to operate. Oak Street Funding makes loans to insurance agencies secured by commissions.


Post a comment to this story

We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
You are legally responsible for what you post and your anonymity is not guaranteed.
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
Subscribe to IBJ
  1. The $104K to CRC would go toward debts service on $486M of existing debt they already have from other things outside this project. Keystone buys the bonds for 3.8M from CRC, and CRC in turn pays for the parking and site work, and some time later CRC buys them back (with interest) from the projected annual property tax revenue from the entire TIF district (est. $415K / yr. from just this property, plus more from all the other property in the TIF district), which in theory would be about a 10-year term, give-or-take. CRC is basically betting on the future, that property values will increase, driving up the tax revenue to the limit of the annual increase cap on commercial property (I think that's 3%). It should be noted that Keystone can't print money (unlike the Federal Treasury) so commercial property tax can only come from consumers, in this case the apartment renters and consumers of the goods and services offered by the ground floor retailers, and employees in the form of lower non-mandatory compensation items, such as bonuses, benefits, 401K match, etc.

  2. $3B would hurt Lilly's bottom line if there were no insurance or Indemnity Agreement, but there is no way that large an award will be upheld on appeal. What's surprising is that the trial judge refused to reduce it. She must have thought there was evidence of a flagrant, unconscionable coverup and wanted to send a message.

  3. As a self-employed individual, I always saw outrageous price increases every year in a health insurance plan with preexisting condition costs -- something most employed groups never had to worry about. With spouse, I saw ALL Indiana "free market answer" plans' premiums raise 25%-45% each year.

  4. It's not who you chose to build it's how they build it. Architects and engineers decide how and what to use to build. builders just do the work. Architects & engineers still think the tarp over the escalators out at airport will hold for third time when it snows, ice storms.

  5. http://www.abcactionnews.com/news/duke-energy-customers-angry-about-money-for-nothing