The former holding company for Colonial Bank, which was seized by federal regulators last year, is suing the Federal Deposit Insurance Corp. over the rights to millions of dollars of disputed assets.
In a lawsuit filed late last week, bank holding company Colonial BancGroup Inc. sued the FDIC, the bank's receiver, over the rights to a number of assets — including tax refunds, proceeds from insurance policies and other property — that it says belong to the bankruptcy estate. The FDIC claims it has dibs on the assets.
The restructuring professionals overseeing Colonial BancGroup's Chapter 11 case are asking Judge Dwight H. Williams Jr. of the U.S. Bankruptcy Court in Montgomery, Ala., to decide whether the assets are property of the bankruptcy estate.
At issue are assets that the parent company said it transferred to the bank while it was insolvent. Such transfers, which could be worth hundreds of millions of dollars, can sometimes be unwound under bankruptcy law.
Among those transfers, lawyers for the parent said in court papers, is a $166 million tax refund the holding company received in June 2009. "All or a substantial part" of that went to Colonial Bank to shore up the bank's capital.