The parent of Chicago's Corus Bank has moved to head off a grab by federal regulators at more than $257 million in tax refunds stemming from the bank's collapse.
Corus Bankshares Inc. filed for Chapter 11 bankruptcy protection after the bank was seized in September. The parent company asked the U.S. Bankruptcy Court in Chicago on Monday to declare expected tax refunds property of its bankruptcy estate. Such a declaration would force the Federal Deposit Insurance Corp. to stand in line along with the company's other unsecured creditors.
The FDIC is serving as receiver for the bank, which was packed with loans to condominium development projects when the housing market crumbled. It is likely to lay claim to the tax refunds as it tries to find money to pay creditors of the thrift. A spokesman for the FDIC could not immediately be reached for comment Tuesday.
The money is coming back because losses tracked to Corus Bank's failure and seizure will be counted against years of taxes paid when the lender profited from the building boom.
Corus Bankshares listed debts of nearly $533 million when it filed for bankruptcy protection. More than $416 million of the parent company's debt load is principal and interest owed to subordinated bondholders, court papers say. A similar dispute over tax refunds is a focal point of another bank-failure-related bankruptcy, that of Washington Mutual Inc.