United Western Bancorp Inc (fka UWBKQ)

[imawswami]

Effect of the Abandonment Part II

Post #51917 NEWTOGAME
"Effect of the Abandonment
Once an abandonment is final, the property is no longer property of the bankruptcy estate and is not under the control of the trustee. The trustee is not responsible for it nor can the trustee sell it, secure it, or have anything more to do with it."

https://www.thebankruptcysite.org/resources/bankruptcy/chapter-7/property-abandonment-bankruptcy-case.htm

Looked at from another angle (shareholders):The corporate entity/property still exists [beyond BK closure] and could have value in the future, it's just not the problem of the BK estate Trustee.

What NEWTOGAME is driving at is a few steps ahead in the BK 7 process we are witnessing.

And spoiler alert, this may be very important to us as the debtor/shareholder,beyond BK closure.

Let's go back for a second to this portion of BK filing 710:

"The Balance Sheet for the Receivership currently shows a net deficit of $(139,298,000.00). https://receivership.fdic.gov/drripbal/bank/10331?FIN=10331 Thus, the likelihood of a distribution to UWBI on its Bank Stock is very remote.

On the other hand, despite the large deficit, the Receivership shows on the asset side of the balance sheet cash and investments of
$66,364,000.00 that could potentially generate future income. If the Trustee maintains ownership of the Bank Stock as an asset, the Trustee is informed and believes based on advice from experts in federal income taxation that UWBI will likely not be granted permission to “deconsolidate” from the consolidated holding company group and in particular the Bank because UWBI would not be able to represent to the IRS that is has no assets and no possible future income. This could put the Trustee in the position of being required to reopen this case and to file a tax return in the future with no funds available to do so. The alternative would be to keep this case open indefinitely until the Receivership is terminated. The Trustee believes the latter alternative is unacceptable as this case is already nine years old. 14.11 U.S.C. §554(a) provides: “After notice and a hearing, the trustee may abandon any property of the estate that is burdensome to the estate or that is of inconsequential value and benefit to the estate.” In addition, 11 U.S.C. 554(c) provides: “Unless the court orders otherwise, any property scheduled under section 521(a)(1) of this title not otherwise administered at the time of the closing of a case is abandoned to the debtor and administered for purposes of section 350 of this title.” Thus, it is likely that the closing of this case will trigger an abandonment of the Bank Stock. However, the Trustee believes it is in the best interests of the estate to obtain an Order approving the abandonment of the Bank Stock to allow UWBI to deconsolidate from the group and foreclose any future possibility of being required to file a tax return on account of income generated by the Receivership.


So you are suggesting Swami, that somehow the FDIC is going to squeeze value out of a $139mm deficit after the BK closure, dropping it into the remaining corporate structure, and those dollars are what NEWTOGAME is very much eyeing as a shareholder?

Yes.

Do you really believe that likelihood of an FDIC distribution after BK closure is "remote" as they say....given that, that same (and greater) deficient on the FDIC books existed back when they admittedly were cutting checks to the estate that required UWBKQ income tax payments for years during this "hopelessly insolvent BK?"

No.

This is the heading above BK filing #710:

Motion For Order Approving Abandonment of Asset Pursuant to 11 U.S.C. §554(a)

Here is the Code:

11 U.S. Code § 554 - Abandonment of property of the estate


(a) After notice and a hearing, the trustee may abandon any property of the estate that is burdensome to the estate or that is of inconsequential value and benefit to the estate.
(b) On request of a party in interest and after notice and a hearing, the court may order the trustee to abandon any property of the estate that is burdensome to the estate or that is of inconsequential value and benefit to the estate.
(c) Unless the court orders otherwise, any property scheduled under section 521(a)(1) of this title not otherwise administered at the time of the closing of a case is abandoned to the debtor and administered for purposes of section 350 of this title.
(d) Unless the court orders otherwise, property of the estate that is not abandoned under this section and that is not administered in the case remains property of the estate.

This is what can happen after abandonment and BK closure:

11 U.S. Code § 350 - Closing and reopening cases


(a) After an estate is fully administered and the court has discharged the trustee, the court shall close the case.
(b) A case may be reopened in the court in which such case was closed to administer assets, to accord relief to the debtor, or for other cause.




Newtogame is simply sharing what he anticipates the coming moves we may
see in the closure, whatever form that may take e.g. special dividend perhaps post BK or whatever.

And Newtogame, you have permission to share whatever we have throw around whenever you feel the time is right. You have done a man's job here and it's very possible the debtor would not be in the position it is in today without that fateful call to Buckley Sandler. Grazie.

The above was opinion and conjecture on my part.