Hedge fund firm Ellington Management Group has agreed to buy $170 million in loans from subprime mortgage provider New Century Financial.

According to a report by Bloomberg, Ellington is buying the loans for less than 30 cents on the dollar, agreeing to pay $58 million for them in a court-supervised auction. Many of the loans, however, are likely to be difficult to collect or completely worthless.

Irvine, Calif.-based New Century issued about $60 billion in loans last year alone. At the beginning of April, the company was forced to sell its loan servicing business to Carrington Capital and file for bankruptcy. Carrington will pay $133 million for the unit unless someone else comes up with a higher bid.

New Century has already agreed to sell other assets, including some of its loans, to Greenwich Capital Financial Products. Greenwich Capital and CIT Group agreed to provide $150 million in financing to keep New Century operational, but when the company failed to attract bids at a bankruptcy auction earlier this month, management announced they would be laying off the company’s 2,000 remaining workers.

Brad Morrice founded New Century in 1995 with some former associates from Option One Mortgage. Federal prosecutors are currently investigating accounting errors at New Century to determine if there was any wrongdoing.