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TEST CASE: "You're seeing … the development of strategies," says Brennan Ryan at Nelson Mullins. "Other banks that are at the end of the Trups deferral period are going to ask, 'Can't we just wait it out and see what happens?' The answer is no, and this case will serve as an example of why not."

Minnesota Bankruptcy Delivers a Trust-Preferred Reality Check

A group of investment firms has forced American Bancorp. into liquidation over unpaid trust-preferred debt. Creditors have threatened to go this route before but this is the first time any have followed through, serving as an ominous precedent for the up to 300 banks in danger of defaulting on the hybrid securities.

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