American Home Says Unit Sale Approved

American Home Investment Corp, which was the 10th-largest U.S. mortgage lender before it filed for bankruptcy, said on Wednesday that an affiliate of billionaire investor Wilbur Ross was granted court approval to buy its loan servicing unit.

The purchase price, under a stalking horse agreement, will be about $500 million, the company said.

The company said it is now soliciting competing proposals, with the bidding open until October 2, ahead of an auction set for October 5.

American Home said it does not believe the sale of these assets under the Chapter 11 process will enable it to pay creditors in full, or have any funds to distribute to shareholders.

American Home filed for Chapter 11 on August 6.

American Home shares were down 3 cents, or 7 percent, at 46 cents a share on the Pink Sheets.