Trial Ordered In Downey Financial-FDIC Refund Battle

Law360, New York (October 20, 2010, 6:46 PM EDT) -- A bankruptcy judge Wednesday ordered a trial to determine whether the Federal Deposit Insurance Corp. or the estate of Downey Financial Corp. owns a $370 million tax refund, the single biggest asset in the defunct lender’s Chapter 7 case.

Judge Christopher S. Sontchi of the U.S. Bankruptcy Court for the District of Delaware agreed with the FDIC that an adversary proceeding was the proper venue for the dispute.

The Chapter 7 trustee in the case had been pursuing the matter as part of the bankruptcy proceedings,...
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