Community Activists Want To ReconstituteFailed CDCU
DENVER - (08/11/04) -- Founders of the Denver CommunityDevelopment CU are asking a federal bankruptcy here court to unwindthe merger and liquidation of the 10-year-old CDCU, almost twomonths after state regulators approved the merger of the failedinstitution into Denver Community FCU. Thomas Foster, who helpedcharter the credit union and was one of the dissenting directors inthe merger vote, has filed a petition with the U.S. BankruptcyCourt for an involuntary Chapter 11 to reorganize the credit union,which was taken under conservatorship by the state Feb. 9, thenmerged on June 25. But state regulators assert that federallyinsured financial institutions are exempt from federal bankruptcylaws and have asked the court to dismiss the unusual petition."This is an effort to unravel the merger, to get the credit unionback, But we feel it's too late. The merger is done," David Paul,commissioner of the Division of Financial Services, told The CreditUnion Journal. Net capital in the tiny ($2.7 million) credit unionhad declined to 3.3% by Dec. 31, well below NCUA's minimum capitalrequirement under PCA, and to less than 1% at March 31, accordingto Paul. "There was no viable plan to return it to an adequatecapital level," he said.