FDIC Calls For Colonial Ch. 7 To Pay $1.3B Claim

Law360, New York (May 24, 2010, 4:54 PM EDT) -- The Federal Deposit Insurance Corp. is turning up the heat on Colonial Bancgroup Inc., claiming the bankrupt bank holding company must fork over millions in deposits and convert to a Chapter 7 liquidation proceeding to cover the $1.3 billion owed to the agency.

With a hearing scheduled Wednesday in the U.S. Bankruptcy Court for the Middle District of Alabama, the FDIC urged Judge Dwight H. Williams Jr. to use Colonial deposits to set off its obligations under a capital maintenance agreement with the Federal Reserve and...
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