Corus fights to keep $257M in tax refunds

By Dow Jones Newswires
Posted June 29, 2010 at 2:02 p.m.

The parent of Chicago’s Corus Bank has moved to head off a grab by federal regulators at more than $257 million in tax refunds stemming from the bank’s collapse.
Corus Bankshares Inc. filed for Chapter 11 bankruptcy protection after the bank was seized in September 2009. Monday, the parent company asked the U.S. Bankruptcy Court in Chicago to declare expected tax refunds property of its bankruptcy estate. Such a declaration would force the Federal Deposit Insurance Corp. to stand in line with the company’s other unsecured creditors, waiting for payment.

The FDIC is serving as receiver for the bank, which was packed with loans to condominium development projects when the housing market crumbled. It is likely to lay claim to the tax refunds as it tries to find money to pay creditors of the thrift. A spokesman for the FDIC could not immediately be reached for comment Tuesday.

The money is coming back because losses tracked to Corus Bank’s failure and seizure will be counted against years of taxes paid when the lender profited from the building boom.

Corus Bankshares listed debts of nearly $533 million when it filed for bankruptcy protection. More than $416 million of the parent company’s debt load is principal and interest owed to subordinated bondholders, court papers say.

A similar dispute over tax refunds is a focal point of another bank-failure-related bankruptcy, that of Washington Mutual Inc., former parent of Washington Mutual Bank, or WaMu.

In the case of WaMu’s former parent, the dispute over the tax refunds involved not just the FDIC, but also J.P. Morgan Chase & Co. (JPM), WaMu’s new owner. A proposed settlement that splits the tax refunds three ways is built into Washington Mutual’s Chapter 11 plan. The settlement proposal has drawn fire from shareholders of the parent company and from bondholders of WaMu, the failed thrift. Both say J.P. Morgan is getting too much out of the tax split, more than it paid for WaMu.

Corus, like WaMu, went under due to the collapse of the housing market, but only after racking up years of profits. During normal times, banks and their parents share the benefit of tax refunds, under formal agreements.

Most such agreements send the tax refund to the parent company first. The parent then splits the money with the operating unit, after applying the agreed tax sharing principles.

Attorneys for Corus’ parent say the tax-sharing agreement translates into unsecured creditor status for the FDIC in bankruptcy court.

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  1. Kyle June 29, 2010 at 2:47 pm


    JPMorgan admits that the FDIC took over a solvent bank in one of the latest court documents…

    I’m enclosing a few more documents filed through the BK court in regards to a declaration of Thomas M. Blake ( ).

    The declaration can be found in 103-4.pdf at
    12. Based on my review to date, there is no indication that the OTS performed a solvency analysis consistent with the test for insolvency specified in the Bankruptcy Code. There is no indication that the OTS assessed the fair sale-able value of the assets of WMB (or WMI). Nor is there an indication that OTS compared the fair sale-able value of the assets of WMB (or WMI) to the total amount of either company’s respective liabilities. There is no indication that the OTS performed a comprehensive cash flow analysis of WMB (or WMI). Instead, the OTS found that “WMB met the well-capitalized standards through the date of receivership.”8 Thus, without a thorough analysis of the assets, liabilities and capital of WMI and WMB, it is not possible to come to a reliable conclusion concerning the financial solvency of either entity, whether on a consolidated or stand-alone basis.

    Here is another document that says as of August 14, 2008:
    “We propose to decapitalize WMBfsb by returning $20 billion of capital to its parent. The $20 billion will include the master note of approximately $7 billion, proceeds from $3.5 billion of Discount Notes and cash generated through additional wholesale deposits and advances from FHLB Seattle. We propose the payment of at least $10 billion by September 30, 2008 and the remaining $10 billion through December 2009.”

    “The net balance sheet of WMBfsb will be approximately $34 billion to $36 billion after Project Fillmore. The leverage ratio will decrease to 25% from 62%. A well-capitalized institution requires an 8% or higher leverage ratio.”

    Read reference page 45 of DOCUMENT 103-1.pdf from here:

    Included, is the form to the OTS requesting a decapitalization of WMBfsb. Pg. 117

    Enclosed is a link to the affidavit of Doreen Logan who is the Controller/ Assistant Treasurer of Wamu who states that there was no liquidity problems;…&btnG=Search

    Remember, WMBfsb was also taken from the holding company and sold to JPMorgan/Chase with all of the other assets for only $1.88bil…..

  2. Kyle June 29, 2010 at 2:47 pm

    Jamie Dimon planted “moles” in Wamu??? JPMorgan committed corporate fraud???

    Wamu’s claims against JPMorgan/Chase;

    Debtors seek the Rule 2004 examination of the following Knowledgeable Parties: (Pg. 443 onward shows internal emails of JPM talking about wiping out Wamu shareholders many months before the seizure)

  3. Kyle June 29, 2010 at 2:48 pm
  4. Kyle June 29, 2010 at 2:48 pm

    The Biggest Banking Heist in World History: Washington Mutual

    Please read this descriptive complaint that was submitted to the SEC from Apex Venture Advisors Mike Stathis Managing Principal on October 7, 2008 in regards to the manipulation that occurred on Wamu’s stock;

  5. Kyle June 29, 2010 at 2:49 pm

    I’m also enclosing another link that quotes Judge Hughes from a case against the FDIC that was wrapped up on August 24, 2005;

    “The record shows that the swap was the only reason for this suit. It also shows that the FDIC knew that it had no factual or legal basis for its claims, and that its cases here and in Washington were shams.”

    As usual, Judge Hughes is acerbic in his opinion regarding the FDIC’s conduct, noting in particular that FDIC officials “lied about it all under oath” and they “discarded the mantle of the American Republic for the cloak of a secret society of extortionists.”

    “It’s hard to find a word that captures the essence of the FDIC’s bringing this action. Irresponsible is close. Arbitrary, dishonest, exploitative, extortionate, and abusive all fit.”

    Judge Hughes concluded that Hurwitz and Maxxam “will recover their costs because the record reveals corrupt individuals within a corrupt agency with corrupt influences on it, bringing this litigation.”