FDIC Slams Colonial Bid To Use $38M Cash Collateral

Law360, New York (September 24, 2009, 2:12 PM EDT) -- The Federal Deposit Insurance Corp. has challenged a motion by Colonial BancGroup Inc., the holding company for the defunct Colonial Bank, to tap $38 million in cash collateral, asserting that the debtor has no right to the funds and that hiring outside professionals would only drain the firm's few remaining assets for the professionals' own benefit.

The FDIC, which is serving as the receiver for Colonial, filed its objection Sept. 23 to the company's Sept. 18 emergency motion seeking authorization to use cash collateral in the...
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