Capmark Financial Group Inc. of Horsham, Pa., has obtained bankruptcy court approval to pump as much as $650 million into its subsidiary bank to satisfy federal regulators' demands.
The commercial real estate lender will send $400 million to its Capmark Bank unit on or before Thursday, and it could infuse another $250 million into the bank next year, according to papers filed last week with the U.S. Bankruptcy Court in Wilmington, Del.
The payments satisfy the Federal Deposit Insurance Corp., which had said that the declining value of real estate loans had left the Midvale, Utah, bank undercapitalized. The bank unit is not operating under bankruptcy protection. Without the payments, the FDIC could have appointed a receiver to take over the bank and liquidate its assets.
The resulting "fire sale" would have diminished recoveries for Capmark Financial creditors, the company said.
The FDIC raised flags over Capmark Bank after a Sept. 30 report showed that its assets were declining in value and that 10% of its portfolio were nonperforming loans.
Capmark, one of the nation's largest commercial real estate lenders, has been hit hard by the recession, which emptied retail spaces and office buildings and drove down property values.