$490-million sale ofits North American servicing and mortgage banking businesses,its announcement of a $1.6-billion loss in the second quarter andits indicating that it could file for a Chapter 11 reorganization.The ratings agency had cut Capmark's rating to Caa1 last April.

In a release from Moody's, the agency says a sale of Capmark'sservicing and mortgage banking businesses "would remove key sourcesof income needed to service and repay unsecured debt obligations,while impairing the value of its franchise and remainingbusinesses."

Moody's says the downgraded rating also stems from "the materialdeterioration in asset quality, the diminished size of itsunencumbered asset portfolio, and the potential for additionalrequired support--possibly in cash and/or assets--to bolsterCapmark Bank," Capmark's industrial banking unit headquartered inSalt Lake City. "As a result, Moody's believes that the unsecuredlenders and bondholders, either in a default or a restructuringscenario, would experience substantial losses. The C ratingreflects the potential loss severity."

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Paul Bubny

Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.