EON

Washington – American Home Mortgage Corp. filed for bankruptcy protection on Monday, the latest casualty of a mortgage industry that has plunged into distress.

The Melville, New York-based company’s request for Chapter 11 bankruptcy protection — filed in bankruptcy court in Wilmington, Delaware — caps more than a week of turmoil for what was last year the 10th-biggest U.S. home lender.

Ten days ago, American Home Mortgage froze the 70 cent-per-share dividend scheduled to be paid that day.

Last week, American Home Mortgage said many of its lenders wanted their money back, and said it was unable to deliver as much as $800 million (EU578 million) for mortgage loans promised to home buyers.

The company said late last week it planned to lay off almost 90 percent of its 7,000 employees.

The stock market had already anticipated that the company was likely to go bankrupt. The company’s shares, which closed 2006 at more than $35, tumbled to 69 cents on Friday. In premarket trading Monday, the stock fell 20 cents, or 28.1 percent, to 50 cents.

Several analysts had predicted shareholders would recover little if anything after American Home Mortgage sold off its assets to repay creditors.

American Home Mortgage’s 40 biggest creditors include virtually all of Wall Street. The company’s three biggest creditors are Deutsche Bank AG, Wilmington Trust Co., and JPMorgan Chase & Co.

Deutsche Bank had no comment. Neither Wilmington Trust nor JPMorgan Chase could be reached immediately for comment.

American Home Mortgage hired the law firm Young Conaway Stargatt & Taylor LLP as general bankruptcy counsel. The company hired Stephen F. Cooper to be chief restructuring officer. Cooper was also chief restructuring officer for Enron Corp.