Days after Anchor BanCorp Wisconsin filed for bankruptcy, one of its creditors is firing back.
The struggling Anchor (ABCW) in Madison has commitments of $175 million of fresh capital, but creditor Associated Banc-Corp (ASBC) refused to sign off on the deal, according to bankruptcy court documents. Anchor then filed for Chapter 11 to facilitate it recapitalization.
Associated has a 16% interest in an $183 million loan to the $2.4 billion-asset Anchor. U.S. Bancorp (USB) and Bank of America (BAC) are the other holders and have consented to the agreement.
Associated also voted against the bankruptcy plan, but the $24 billion-asset Associated says it is not the reason for Anchor's bankruptcy.
"Any statement that Associated Bank 'forced' Anchor BanCorp to file bankruptcy is inaccurate," Jennifer Kaminski, an Associated spokeswoman, said in an email.
The bankruptcy calls for the $183 million which includes several years of accrued interest to be reduced to a $49 million cash settlement. Meanwhile, the Treasury Department has agreed to extinguish its $138 million interest including preferred shares and accrued dividends for a 3.3% common equity stake in the reorganized company. The deal would essentially wipe out existing shareholders.
Associated declined to comment about the bankruptcy of its borrower on Tuesday, but after the squabble between the two Wisconsin banks was picked up by media across the country, Associated spoke out.
"Associated Bank is disappointed that the leadership of Anchor BanCorp would blame any of their creditors for their decision to file for bankruptcy protection," Kaminski said in the email. "It appears to us that Anchor filed bankruptcy to avoid honoring its commitments to its lenders and the U.S. taxpayers under [the Troubled Asset Relief Program.]"