A second Florida thrift is suing New York State Superintendent of Banks Neil Levin, accusing him of planning to use $1 million of its cash collateral to pay off the debts of Nationar, a failed check-clearing company.
Comfed, the holding company for Community Savings of North Palm Beach, is asking a New York court to issue an injunction preventing Mr. Levin from selling a $40 million package of Nationar loans without including all of the cash collateral.
Comfed's Employee Stock Option Plan has a $3 million loan from Nationar, collateralized by stock and $1.2 million in cash.
The thrift alleges that Mr. Levin plans to transfer only $200,000 in cash with the loan, reserving the rest for use in reducing Nationar's debt, estimated at $29 million when the state seized the company Feb. 6.
Comfed claims that since it never defaulted on the loan, Nationar and the superintendent are not entitled to use the collateral for their own purposes.
Banking Department officials declined to comment.
The suit is the second filed against Mr. Levin over the Nationar loans this month. Fort Pierce's Harbor Financial filed suit last week, seeking to prevent $500,000 of its collateral from being kept by New York State.
Harbor has a $1.5 million loan, backed by its stock and $1 million in cash collateral.
New York State Supreme Court Justice Beatrice Shainswit rejected Harbor's request for a temporary restraining order, but set a hearing for May 22 to consider the two Florida thrifts' request for a preliminary injunction.
Raymond J. Gustini, a Washington attorney who represents both Comfed and Harbor, said he was not surprised by Justice Shainswit's decision.
"We'll have a better opportunity with fuller arguments before the judge on the preliminary injunction," he said. "We expect that the record will clearly show that the loans were fully collateralized in the amount we stated."
The loans were made by Nationar in 1993 and 1994 to 15 employee stock option plans around the country. The state is searching for a buyer for the loans, but hasn't sent out a final package proposal to bidders partly because of the collateral controversy, Mr. Gustini said.
Nationar, which was founded in 1933 as a liquidity source for New York state's thrifts, was shut down by the state after a loss of confidence by shareholders and a run on its deposits precipitated a liquidity crisis.