United Western Bancorp Inc. in Denver has filed for chapter 11 bankruptcy in a move that would allow the company more time to pursue its lawsuit against federal regulators for seizing its thrift in January 2011.
On Monday, the company said in a press release that it filed for relief in United States Bankruptcy Court for the District of Colorado. The restructuring is hinged on the company getting support from the creditors and equity holders and attracting additional capital as it pursues its litigation to regain control of the operations, assets and liabilities of United Western Bank, the $2 billion-asset failed thrift.
The company's executives, acting on behalf of the failed thrift, sued the Office of Thrift Supervision in February 2011 in the United States District Court for the District of Columbia, claiming the regulators acted in an arbitrary and capricious manner in seizing the thrift, particularly because the company had capital committed from new investors. The Office of the Comptroller of the Currency took over as defendant in July, following the merger of the OTS into the OCC.
The executives and the OCC have been battling over the release of correspondence between the OTS and the Federal Deposit Insurance Corp. The company said in the press release that it is awaiting additional information from the OCC and that all discovery is expected to be completed by Wednesday. It added that it expects the OCC to file a motion for summary judgment to dismiss the case, while the company intends to file a motion for summary judgment in its favor.
It is unclear how United Western could recover its failed thrift should the judge rule in its favor, as its operations and balance sheet have been absorbed into First Citizens Bank in Raleigh, N.C.. Several observers have said the executives are likely seeking a cash settlement.
The company also said in the press release that it intends to file monthly operating reports with the bankruptcy court. Although it is a public company, United Western has not filed any quarterly reports with the Securities and Exchange Commission since reporting its figures for the second quarter of 2010. It said it hasn't done so because it doesn't have access to the books of the thrift, its most significant operating unit.