Alert September 21, 2010

FDIC Appeals Bankruptcy Court’s Denial of $905 Million Priority Claim

On September 13, 2010, The FDIC appealed a recent bankruptcy ruling, discussed in the September 14, 2010 Alert, that barred the agency from submitting a claim for more than $900 million in a Chapter 11 bank holding company liquidation (In re The Colonial Bancgroup, Inc., Bankr. M.D. Ala., No. 09-32303-DHW).  The FDIC appeals to the Middle District of Alabama on several issues, most notably the bankruptcy court’s refusal to require the bankrupt bank holding company The Colonial Bancgroup, Inc. (“Colonial”) to contribute capital to its bank subsidiary pursuant to several purported capital commitment agreements between Colonial and its regulators.