Corus Bankshares Inc. (fka CORSQ)

[errett]

From meischer_ed on Ya*** board

Weil Bankruptcy Blog - Ruling In Re Colonial "important precedent" 8-Mar-11 05:51 pm Step Off! Colonial BancGroup Bankruptcy Court Rejects FDIC Setoff Attempt

A recent decision in In re The Colonial BancGroup, Inc., Case No. 09-32303-(DHW) (Bankr.M.D. Ala. Jan. 24, 2011), addresses the complex tripartite relationship between a bank holding company in bankruptcy, the Federal Deposit Insurance Corporation as receiver for the failed bank subsidiary, and the successor bank which assumed liability for the failed bank’s deposit accounts. The decision limits the FDIC’s ability to exercise setoff rights with respect to deposit accounts of the holding company/debtor.

The FDIC wasted no time in filing an appeal the day after the Bankruptcy Court released its decision. The FDIC clearly recognizes that the effect of a HoldCo bankruptcy on clawback rights under a P&A agreement is an important precedent with implications for many other cases. The FDIC already is appealing an earlier decision in the case in which the bankruptcy court rejected its contention that section 365(o) of the Bankruptcy Code required the HoldCo to satisfy a capital maintenance requirement. Keep an eye on the Weil Bankruptcy Blog for updates as these appeals move forward.

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