Once slated for liquidation, Corus Bankshares Inc. received court approval for its bankruptcy exit plan that calls for the former Illinois bank holding company to emerge as a real estate investment firm.
Judge Pamela S. Hollis of the U.S. Bankruptcy Court in Chicago last week signed off on the plan Corus Bankshares crafted alongside the hedge fund manager Tricadia Capital Management that results in the rare revitalization of a bank holding company whose subsidiary bank was seized by regulators.
With court approval in hand, Corus now intends to pursue a $257 million lawsuit against the Federal Deposit Insurance Corp., the agency that became Corus Bank NA's receiver in September 2009. If successful, that suit would provide funds for Corus Bankshares to restart a dormant real estate investment operation, court papers said.
The FDIC and Corus Bankshares are fighting over the rights to potentially valuable tax writeoffs called net operating losses. Under tax law, a Corus entity could count losses suffered as the bank careened toward failure amid the financial crisis against profits made earlier in the decade when it boomed as a real estate lender.
Whether the right to the tax benefits lies at the parent company level or with the underlying bank is in dispute.
Under the approved plan, Corus Bankshares will be owned by the bank holding company's unsecured creditors, primarily Tricadia and other holders of securities related to collateralized-debt obligations. Those creditors, owed $415.6 million, will have the option to take a cash payment or equity in the reorganized company.
Corus' existing ownership, however, will be wiped out as their stock "shall be deemed cancelled," according to the plan.
Corus Bankshares gained approval for the plan after it won the backing of five major claim holders that voted last year to reject a previously proposed liquidation plan.
While creditors would have received just pennies on the dollar in liquidation, they could receive a recovery of more than 50% if the company succeeds in the FDIC suit.
