A federal judge agreed to a temporary halt in Colonial BancGroup Inc.'s upcoming trial with the Federal Deposit Insurance Corp. over more than $1.5 billion in disputed assets, allowing him to rule on the holding company's plan to get out of bankruptcy.
Judge Dwight H. Williams Jr. of U.S. Bankruptcy Court in Montgomery, Ala., Thursday signed off on a consent order, staying discovery in the case through May 26. That's almost two weeks after the May 13 hearing at which Williams is set to consider confirmation of Colonial's Chapter 11 exit plan.
The FDIC agreed to the discovery extension despite criticizing Colonial's courtroom "gamesmanship" and "stalling tactics."
Judge Myron H. Thompson of the U.S. District in Montgomery is overseeing Colonial's lawsuit against the FDIC. Thompson, however, referred all discovery-related issues to the bankruptcy court.
The FDIC, the receiver for Colonial Bank, has been sparring with the bank's parent since it took over the bank in 2009. Colonial BancGroup is suing the FDIC to recoup some $1.5 billion in funds transferred to its banking subsidiary in the months before it was taken over.
