Downey Financial Trumps FDIC In $374M Tax Refund Tussle

Law360, Wilmington (October 9, 2013, 6:55 PM EDT) -- Downey Financial Corp.'s Chapter 7 trustee notched a victory over the Federal Deposit Insurance Corp. Tuesday as a Delaware bankruptcy judge ruled that a nearly $374 million tax refund belongs to the failed home lender's estate, not the FDIC.

In a 56-page opinion, U.S. Bankruptcy Judge Christopher S. Sontchi determined that under the tax sharing agreement between Downey Financial and subsidiary Downey Savings and Loan Association FA, the refund is an asset of the parent's bankruptcy estate.

“At its core, this is a case of contract...
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