PROVIDENCE, R.I. – A federal court has given Members United Corporate FCU until the end of the month to respond to a request by Coastway Community Bank, known till July as Coastway CU, to return almost $600,000 of funds the credit union-convert has on deposit with its one-time corporate credit union.
The funds are the remainder of a $1 million deposit the long-time credit union had with its then-corporate, Empire Corporate FCU, which merged in 2006 to become Members United, according to a suit filed last week by the one-time credit union.
Under the requirements of membership capital agreements signed by all members, Coastway provided a three-year notice of redemption in September 2006. As a result, on September 11, 2009, Members United transferred $420,000 of the funds to Coastway’s transaction account, but has failed to provide the remaining $580,000, according to the suit.
"Despite demand, Members United has refused to deposit the remaining balance of Regular MCS into Coastway’s Transaction Account or otherwise pay the remaining balance that is due and owing to Coastway," asserts the bank, the 89-year-old institution which converted from a credit union in July. "Under the terms of the MCS Agreement, Coastway was entitled to withdraw the funds in the Regular MCA, as long as it provided three years notice of intent to do so."
The court ordered Members United to respond to Coastway’s suit by Oct. 30.
A lawyer representing Members United in the case did not immediately respond to a phone call from The Credit Union Journal.
