WASHINGTON - Advanta Corp. placed $70 million of its reserves in an escrow account in February as part of a deal with FleetBoston Group Inc. in connection with long-standing litigation.
According to Advanta's 2000 annual report, filed Monday with the Securities and Exchange Commission, Fleet, in return, dismissed its injunction claim against Advanta's sale of its mortgage business to Chase Manhattan Mortgage Corp., a unit of J.P. Morgan Chase & Co.
The $70 million in escrow represents Advanta's maximum exposure to Fleet in the litigation, assuming a court were to rule in favor of Fleet on every claim involved, the filing said. The court presiding over the claims will order the funds paid to Advanta or to Fleet depending on the outcome of that litigation.
Fleet asserted in a 1999 lawsuit that Advanta failed to complete certain post-closing adjustments to the value of the assets and liabilities of a consumer credit unit it sold to Fleet. A trial is scheduled for July.