Bankruptcy Judge Linda Riegle on Wednesday said she will confirm the reorganization plan for USA Capital, a private lender that controlled $962 million in assets when it filed for bankruptcy in April.

Compass Partners, a New York-based private equity firm, will be taking over mortgage loan servicing for all but a few of the outstanding loans originated by USA Capital. The New York company, which submitted a winning bid of $67 million, also is buying the assets of USA Capital First Trust Deed Fund, one of two mortgage loan funds managed by USA Capital.

USA Capital solicited money from individual investors around the country and used the money to make short-term mortgage loans secured by real estate, sometimes called trust deeds. The Las Vegas company was handling money for about 6,000 investors around the country and was making monthly payments to lenders, although in some cases the loans were past due.

Thomas Allison, the executive with Chicago-based Mesirow Financial, took over as chief restructuring officer when USA Capital became insolvent and filed for bankruptcy in April. It is one of the biggest bankruptcies in Nevada history.

Allison said he was excited to see the complex bankruptcy, which involved four creditor committees, resolved within nine months.

"It's a tremendous amount of work to have done in that time horizon," Allison said. "It's perfectly exciting really."

The business known as USA Commercial Mortgage, the company that services the loans, will be taken over by Compass, which will continue the business under a new name.

Compass intends to continue originating trust deed loans and working out problems with the remaining loans.

Despite the failed practices, "USA Commercial did have a viable business," Allison said. "(Compass Partners wants) to restore the business. They are well capitalized and well managed."

Allison said he will start to wind down his operations at USA Capital.

The reorganization plan calls for creation of the USA Commercial Mortgage Liquidating Trust, which will replace USA Commercial Mortgage, said Rob Charles, an attorney with Lewis and Roca, who represents the unsecured creditors committee. Geoffrey Berman will serve as trustee for the trust, which also will have an oversight committee.

Michael Tucker, financial adviser to the committee for investors in USA Capital Diversified Trust Deed Fund, will become the Diversified fund's manager.

Lewis and Roca's Charles said he expects Tucker and Berman to file lawsuits in attempts to win judgments and use assets from insiders at USA Capital to satisfy those judgments.