Advanta Corp. is reversing its earlier pledges to reorganize under Chapter 11 protection and now says it will liquidate all its assets while in bankruptcy.
The lender's board of directors has authorized its liquidation, Advanta said Monday. The move is the company's best option to "maximize value for … stakeholders," according to a press release.
Advanta said there would be no money left over for preferred or common stockholders, and gave no other details about creditor repayment.
A representative for Advanta declined to comment further.
Advanta, of Spring House, Pa., sought bankruptcy protection on Nov. 8, pledging to "reorganize under Chapter 11 to preserve stakeholder value." But instead of a reorganization plan, Advanta is now drafting a liquidation plan. It will describe how Advanta will divvy up its remaining assets as well as outline the details of a liquidating trust Advanta wants to create to hold certain assets.
Advanta warned in November that it might be forced to turn over to the Federal Deposit Insurance Corp. its banking arm, a wholly owned subsidiary called Advanta Bank Corp., for receivership. Regulators had expressed concern that the company's financial troubles threatened its ability to operate the bank, but the takeover never came to pass.
Advanta Bank was not included in the company bankruptcy filing, though 19 other Advanta entities are currently under Chapter 11 protection.