After Celebrity Home Loans reportedly laid off most of its employees this week without paying their last paychecks, commissions and severance payments, On Q Financial said the deal to acquire some of the company’s assets has fallen apart.
“There’s nothing left to acquire,” Patrick Lamb, an executive at On Q Financial, said during an interview.
HousingWire first reported on Tuesday that Illinois-based Celebrity’s employees received an email this week saying they were laid off and, in addition, the company will not be able to process its full payroll obligations on Feb. 16 due to “unanticipated events.”
“We are anticipating additional funds and believe this is only a timing issue with our sincere intent to provide you all compensation that is owed to you over the next several weeks,” the email read.
Before that, on Feb. 8, Celebrity communicated to employees that over the past several months, it had been searching for “the right partner to merge” with and “found the perfect fit with On Q Financial.”
“We’ve had discussions with Celebrity about acquiring their remaining production divisions. Not the ones that were sold to Luminate Home Loans, but the ones that were remaining,” Lamb said.
Several of Celebrity’s retail businesses transitioned to Luminate Home Loans in December and January, including Neo Home Loans. Sources said Apex Home Loans and Robert Coomer Group also joined Luminate from Celebrity.
According to Lamb, On Q Financial contacted Celebrity’s former employees to hire and onboard several of them. “We’re trying to provide a landing spot.”
Lamb said that On Q Financial was interested in acquiring eight of Celebrity’s production divisions employing between 300 and 350 loan officers. The company would assume leasing contracts, computers and other assets from the branches.
However, On Q Financial was not acquiring the loan pipeline or Celebrity’s equity. The financial terms were not disclosed due to a confidentiality agreement.
As the deal did not involve the Celebrity company as a whole, On Q Financial did not have access to its balance sheet to check its cash position and financial conditions, according to Lamb.
Arizona-based On Q Financial, founded in 2004, originated $2 billion last year in 46 states. The company has a distributed retail platform, Lamb said. According to Lamb, the company is expected to announce an M&A transaction in the coming months.