Thornburg Mortgage

On August 7, an analyst with Deutsche Bank downgraded Thornburg Mortgage to "Sell", based upon concerns that the company could be faced with increasing margin calls despite the high rating of its mortgage backed securities.[7] Beginning August 9, these same securities experienced a "sudden and unprecedented" decline in value, along with an increase in margin calls.[8] In response, during the week beginning August 13 the company stopped accepting loan applications,[9] sold US$20.5 billion of its mortgage backed securities portfolio (in doing so incurring a capital loss of US$930 million), mitigated the potential for margin calls by reducing its repurchase borrowings and delayed payment of a previously announced stock dividend from August 15 to September 17.[10] The company's stock price closed 47% lower when the delayed dividend payment was announced on August 14, but over the next few days regained most of those losses.[11] A couple of weeks later the company also raised US$500 million through a preferred share offering,[12] a move described as "a desperate attempt to stay afloat",[13] and began accepting applications again.

On March 7, the company announced that it would be restating its 2007 financial results, and also that as of the previous day, it had US$610 million in outstanding margin calls, a much greater amount than cash available.[14] Financial analysts speculated that the company may need to seek bankruptcy protection.[15]

Thornburg Mortgage indicated on March 19 that it had reached an agreement with five of its creditors which stopped additional margin calls for one year but included several conditions, the most urgent of which was to raise US$948 million within seven business days.[16] The five creditors were identified as Bear Stearns, Citigroup, Credit Suisse, Royal Bank of Scotland and UBS[17][18] The company further confirmed that without the additional capital it may have to file for bankruptcy protection.[19] The funding was to be raised through the sale of convertible notes.[16] Having initially been scheduled for March 20, the company pushed back the sale until March 24.[20]

On April 1, 2009, Thornburg Mortgage announced that it would officially cease operations, and enter Chapter 11 bankruptcy. After the sale of all remaining assets, it would no longer exist as a going concern.[21]