RICHARDSON, Texas – Texans CU, which won a $40 million judgment in U.S. Bankruptcy Court just last month, on Tuesday was stung by the same court to the tune of more than $21 million.
In the latest case, the U.S. Bankruptcy Court for the Northern District of Texas found the credit union’s wholly owned CUSO Insurance Group, which has been in bankruptcy since last year, liable for back pay, benefits, legal fees and an earn-out of $21.1 million to Kevin Curley, the former president of the insurance company who is embroiled in a controversy over his firing.
Yesterday an official with Texans emphasized that Tuesday’s ruling by the bankruptcy court is not a judgment but an unsecured claim, and as such it is an estimate of Curley’s claims for the purpose of a reorganization of the CUSO.
Curley sold his company, Curley Insurance Group, to the $2 billion credit union in January 2007 but was fired that April, less than four months later. An arbitration panel ordered the CUSO to rehire Curley and pay him more than $6 million, but the CUSO violated the terms of the reinstatement, according to the bankruptcy court ruling. Faced with the mounting costs of the arbitration ruling, Texans brought the CUSO into bankruptcy last September.
Curley filed an additional claim against the CUSO, saying his second termination deprived him of as much as $14 million in additional compensation due under a so-called earn-out agreement that was part of the original purchase of his company.
The $21 million claim comes just a month after the same bankruptcy court awarded another Texans CUSO, known as CU Liquidity Services, LLC, a $40 million verdict over a dispute concerning a $65 million member business loan the CUSO made to a troubled shopping mall in suburban Chicago.
Losses on its MBL portfolio have caused major problems for Texans, which reported a $44.4 million loss for 2008 and a $51.2 million loss for 2009.
