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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 23, 2000
Commission file number 0-28706
FIRST ALLIANCE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 33-0721183
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(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
17305 VON KARMAN AVENUE, IRVINE, CALIFORNIA 92614
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (949) 224-8500
(Former name or former address, if changed since last report): Not Applicable
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ITEM 3. BANKRUPTCY OR RECEIVERSHIP
On March 23, 2000, First Alliance Corporation (the "Company") and
several of its subsidiaries filed voluntary petitions under Chapter 11 of the
United States Bankruptcy Code (the "Code") in the United States Bankruptcy Court
for the Central District of California. The Company has discontinued new loan
originations and plans on closing all of its retail branches and origination
centers immediately.
The company's filing under the Code is expected to facilitate the
liquidation of a portion of the Company's assets and allow for reorganization
and/or sale of the Company's remaining business and assets. As of the date of
the Company's voluntary bankruptcy petition, the United States Bankruptcy Court
for the Central District of California assumed jurisdiction over the assets of
the Company. As a debtor in possession, the Company remains in control of its
assets and is authorized to operate its business, subject to the supervision of
the Bankruptcy Court.
No assurance can be given that the Company will remain a
debtor-in-possession and that a trustee will not be appointed to operate the
Company's business. In addition, although the Company has begun the process of
formulating a plan of reorganization to be submitted eventually to the
Bankruptcy Court, no assurance can be given that the Bankruptcy Court will
confirm the Company's plan of reorganization or that Company will remain in
control of its assets throughout the pendency of the Company's bankruptcy case.
The fact that the Company filed a voluntary bankruptcy petition may
affect the Company's ability to maintain certain present business arrangements
and may also affect the Company's ability to successfully negotiate future
business arrangements. Among the relationships that may be materially affected
by the Company's commencement of a bankruptcy case is the Company's relationship
with its warehouse financing facility lender and the Company's relationships
with other suppliers of goods and services vital to the Company's financing and
business operations. Notwithstanding the foregoing, the Company's bankruptcy
also may facilitate certain asset sales and reorganization of the Company's
remaining business. Finally, the termination of new loan originations will
adversely affect business operations and the financial condition and results of
operations of the Company.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA INFORMATION, AND EXHIBITS
(a) Financial statements - not applicable.
(b) Pro forma financial information - not applicable.
(c) Exhibits:
(20.1) Press release issued by the Company dated March 23, 2000.
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Date: March 28, 2000
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FIRST ALLIANCE CORPORATION
By: /s/ FRANCISCO NEBOT
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Francisco Nebot
President and
Chief Financial Officer
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE NO.
PRESS RELEASE ISSUED BY THE COMPANY DATED
20.1 MARCH 23, 2000 4
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EXHIBIT 20.1. PRESS RELEASE ISSUED BY THE COMPANY DATED MARCH 23, 2000
FIRST ALLIANCE CORPORATION PRESS RELEASE DATED MARCH 23, 2000
COMPANY CONTACT:
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Francisco Nebot
President and CFO
(949) 224-8403
Susan Linder
Investor Relations
(949) 224-8401
Web Site: www.firstalliancemortgage.com
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For Immediate Release
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FIRST ALLIANCE CORPORATION FILES VOLUNTARY CHAPTER 11 PETITION
IRVINE, CALIF. (MAR. 23, 2000) - Today, First Alliance Corporation (Nasdaq:
FACO), a sub-prime lender headquartered in Irvine, California, whose business is
making mortgage loans primarily to borrowers with impaired credit, announced
that the Company and several of its subsidiaries have discontinued new loan
originations and filed voluntary petitions under Chapter 11 of the United States
Bankruptcy Code in the U.S. Bankruptcy Court for the Central District of
California. This action was made necessary due to legislative proposals limiting
revenue generating capacity and recent unwarranted negative publicity against
the Company arising from the joint stories by the New York Times and ABC News
20/20 program.
Commenting further on the filings, Chairman of First Alliance
Corporation, Brian Chisick said, "First Alliance was created almost 30 years ago
to provide a valuable service to consumers in the sub-prime category and the
Company has made substantial investments to build that business. Unfortunately,
the Company has been inaccurately and unfairly portrayed in recent stories in
the media. These unfair and inaccurate stories have devastated the Company's
30-year reputation and acutely hindered the Company's relationships with
businesses, consumers and regulators. Further, these unforeseen business
circumstances have adversely affected the Company's ability to function,
complete certain critical transactions, and to originate new loans."
The Company will be closing all of its retail branches and origination
centers immediately. This action will result in the layoff of approximately 300
people or 85% of the Company's workforce throughout the United States. The
affected offices are located in California, New York, New Jersey, Illinois,
Arizona, Colorado, Maryland, Oregon, Utah and Washington. Brian Chisick
commented, "The Company has been a provider of sub-prime first mortgages for
many years and this effort has been supported by diligent and hardworking
people. I thank those people who will be departing the Company for their loyalty
and support."
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First Alliance is also asking the Bankruptcy Court to approve a number
of First Day Orders that will enable the Company to develop a Plan under the
protection of Chapter 11. The First Day Orders would include approval to pay
normal employees salaries, wages, and benefits, as well as other basic business
expenses, without interruption. The debtors are represented by William Lobel of
Lobel & Opera LLP, an Irvine, California, law firm specializing in Chapter 11
cases.
"Safe Harbor" Statement Regarding Forward-looking Information or
Statements:
Certain of the matters discussed in this news release are
forward-looking statements that involve risks and uncertainties, including,
without limitation, regulatory, operating, competitive and market risks, risks
related to the Company as a sub-prime lender, and other factors, risks and
uncertainties that may cause actual results to differ materially from such
forward-looking information. Factors that could cause results to differ
materially from those in the forward-looking statements are detailed from
time-to-time in reports filed by the Company with the U.S. Securities and
Exchange Commission, including Forms 8K, 10Q and 10K (a copy of which may also
be obtained from the Company at (949) 224-8401).
CONTACT: Francisco Nebot, President and CFO, 949-224-8403, or Susan Linder,
Investor Relations, 949-224-8401, both of First Alliance Corporation.
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