Mortgage Lenders Network USA Inc., which closed down its wholesale lending division on Dec. 29 after losing access to financing, has filed for Chapter 11 bankruptcy protection.

The company is seeking relief from creditors while it reorganizes, including Merrill Lynch Bank, Ixix Real Estate Capital Inc. and Lehman Brothers Bank, the Hartford Courant reported today.

Mortgage Lenders Network had said they planned to continue operating a profitable mortgage servicing business, but the Courant said that the company has also lost a portion of the $19 billion servicing portfolio.

On Jan. 30, Connecticut’s banking commissioner suspended the subprime lender’s licenses, saying the company failed to fund “in a timely fashion” 97 loans in Connecticut and 1,409 loans in other states. MLN has the right to a hearing to respond to the allegations, which state officials say could result in up to $7.6 million in civil penalties.

MLN has laid off more than half of its workforce of 1,800 nationwide, including about 475 employees in Connecticut, where the company is based, the Courant reported.

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