The former owner of Corus Bank is seeking to keep a grip on its bankruptcy case as it continues to spar with the Federal Deposit Insurance Corp. over the rights to more than $250 million in tax refunds stemming from the bank's collapse.
Corus Bankshares Inc., the parent of Corus Bank until banking regulators seized it a year ago, wants a three-and-a-half-month extension through Jan. 31, 2011 of its exclusive right to file a plan detailing how it intends to liquidate its remaining assets to pay back its creditors.
Exclusive periods bar creditors from filing rival bankruptcy-exit plans while a debtor is working to complete its own, giving a company in Chapter 11 a measure of control over its restructuring. Corus's exclusive plan-filing period is set to end Oct. 13.
In papers filed Thursday in U.S. Bankruptcy Court in Chicago, the one-time bank-holding company said it needs more time to file a plan because of the uncertain status of its legal disputes with the FDIC over $257 million in disputed tax refunds.
The FDIC was appointed receiver of the estate of Corus's bank upon its collapse last September and sold the bank's $7 billion in deposits to Chicago's MB Financial Bank. An investment consortium led by Starwood Capital Group later purchased the bank's $4.5 billion portfolio of construction loans and real estate in a deal valued about $2.8 billion.
About nine months later, in June of this year, Corus filed for Chapter 11 bankruptcy protection. Since the bankruptcy filing, Corus, like a number of other bank-holding companies, has battled the FDIC over the ownership of the tax refunds.
Indeed, Corus Bankshares said its case "should not be viewed entirely in a vacuum," and pointed to the Chapter 11 cases of Colonial Bancgroup and BankUnited Financial Corp., both of which involve similar litigation with the FDIC over tax refunds.
At least a dozen former bank-holding companies are under Chapter 11 protection across the country, the result of more than 200 bank closures by regulators in less than two years.
"Many of these cases feature disputes with the FDIC over the ownership of tax refunds and alleged priority claims," said lawyers for Corus.
The tax refunds at issue stem from substantial losses the Chicago-based Corus posted in 2008 and 2009. Corus Bankshares says it is entitled to those funds, which would provide some cash to repay creditors, including bond investors owed more than $416 million.
The FDIC, however, says the refunds are the property of Corus Bank and therefore belong to it as the bank's receiver.
A hearing on Corus's request to extend its sole control of its Chapter 11 case is scheduled for Sept. 23.
Corus Bank, whose business was concentrated on condominium-development projects, suffered when the housing market crumbled. The FDIC estimates Corus's collapse will cost its insurance fund $1.7 billion.