By JOAN E. SOLSMAN
Moody's Investors Service downgraded Capmark Financial Group Inc. closer to the brink of default Friday, saying the financial-services company may need bankruptcy protection in the wake of this week's announced sale of its North American mortgage and servicing operations.
It came as Horsham, Penn.-based Capmark seeks to restructure its debt and looks at options for its business holdings. In an earnings release, Capmark said it might seek bankruptcy protection to address its problems and raised questions about its viability.
Moody's said the sale would impair Capmark's remaining business and eliminate a stream of income key to repaying debt. The ratings agency also said Capmark's assets have continued to deteriorate in quality and its banking arm may need an infusion of capital, all while its portfolio of unemcumbered assets has shrunk.
Capmark Financial, previously known as GMAC Commercial Holding Corp., was cut two notches to C and kept it on review for a downgrade to default. Moody's had previously downgraded Capmark in April.
The company -- which also reported a $1.61 billion quarterly loss as losses on loans, investments and real estate continued to pile up -- runs three main businesses: lending and mortgage banking, investments and fund management, and servicing. The company primarily works with commercial real estate, according to its Web site.—Jay Miller and Andrew Morse contributed to this report.
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