The interim management team at bankrupt USA Capital, which holds $962 million in investors assets, on Tuesday announced an agreement to accept collateral for a previously unsecured $58 million debt.

The agreement calls for USA Investment Partners, owned by former USA Capital officers Thomas Hantges and Joe Milanowski, to pay 7.75 percent interest on the debts. The principal amount would be due in May 2007 but it could be extended another year if the borrowers provided $20 million in cash or notes.

"The only right (USA Capital) is compromising is the right to immediately sue (USA) Investment Partners for recovery of those (debts) now evidenced by the promissory note," the motion filed by attorney Lenard Schwartzer states.

An exhibit to the motion lists eight companies for real estate projects. USA Investment Partners owned an interest in those eight companies, which were developing properties. In the agreement, Investment Partners pledged its interests in those companies, USA Capital Chief Operating Officer Mark Olson said.

The motion does not identify those projects by type or location, and Olson declined to provide that information before disclosure of the information to investor committees later this week.

The agreement mentions obligations to include the $58 million debt and loans related to 10-90 Inc., which the former owners of USA Capital assigned to USA Capital Diversified Trust Deed Fund, a state registered mortgage loan fund.

Chief Restructuring Officer Tom Allison previously has disclosed little information about the 10-90 Inc. loan, and Olson was not immediately able to answer questions about the reference to the 10-90 Inc. loan in the collateral agreement.

It is unclear which properties, if any, secure the 10-90 loans.

USA Capital, a private lender, used money from individual investors from around the country to make loans secured by real estate. The company filed reports with state officials showing all of the borrowers in 115 loans were current in making payments, but 43 percent of them are past due.

When USA Capital became insolvent and filed for bankruptcy on April 13, there were 3,200 individual investors in two mortgage loan funds and 3,600 investors, sometimes called direct lenders, who directly purchased fractional interests in short-term mortgage loans.

In another development, USA Capital is seeking court approval to open a $15 million credit line from an institutional investor named CapitalSource Finance LLC of Chicago. The proposal would give CapitalSource "first priority security interests" in all the assets of USA Capital, putting investors in line behind the institutional lender.

USA Capital would pay CapitalSource 3 percent plus the 30-day the London Interbank Offered Rate or LIBOR, which was 5.20 percent on Tuesday.

USA Capital wants to use the credit to collect on nonperforming loans, fund administrative expenses, make additional loans for projects that are incomplete, and make other new loans. The motion also calls for authority to use the money for other purposes and to use the credit line if USA Capital fails to obtain unsecured loans.

Under a conditional license from the Nevada Mortgage Lending Division, USA Capital may make new loans but must obtain money for those loans from institutional lenders and not from individual investors.

USA Capital manager Allison said he plans to file a reorganization plan for USA Capital in July and said he will ask Bankruptcy Judge Linda Riegle for permission to make payments to investors after a July 25 hearing.