Thread: IndyMac Files Bankruptcy, Sole Empoyee Is CEO

IndyMac Bancorp Files for Liquidation After Seizure (Update5)

By Jeff St.Onge and Tiffany Kary

Aug. 1 (Bloomberg) -- IndyMac Bancorp Inc., once the second- largest U.S. independent mortgage lender, filed to liquidate its remaining assets three weeks after its bank was seized by U.S. regulators and put under other management.

IndyMac's liabilities are between $100 million and $500 million, according to the Chapter 7 filing by the bank holding company yesterday in U.S. Bankruptcy Court in Los Angeles. IndyMac said it has fewer than 50 creditors, including law and accounting firms and other banks, none of whose outstanding claims were listed.

IndyMac was seized by U.S. regulators on July 11 with its $19 billion in deposits, after a run by depositors left the mortgage lender strapped for cash. The Federal Deposit Insurance Corp. is running a successor institution, IndyMac Federal Bank, and regulators have said they intend to eventually sell the seized bank, while adding that its high risk-lending and mortgage losses make it ``unattractive.''

William Isaac, former FDIC chairman from 1981 to 1985, said the bankruptcy was expected and won't affect the bank's operations. ``The bank was the major asset, so once the bank was seized the fate of the parent company was probably sealed,'' he said in a telephone interview.

`Personal Service'

IndyMac Federal Bank Chief Executive Officer John Bovenzi said in an e-mailed statement that ``customers will continue to receive the same value and personal service'' as they did before the holding company's bankruptcy. The newly created unit is backed by the FDIC's $53 billion deposit insurance fund, which is further backed by ``the full faith and credit of the U.S. government,'' the FDIC said in an accompanying statement.

The FDIC ``has been in sole possession custody and control of all of the books and records of'' IndyMac Bancorp and the court filing was made without access to information that bankruptcy laws typically require, Chief Executive Officer Michael W. Perry said in court papers.

While banks are prohibited from filing for U.S. bankruptcy protection, bank holding companies aren't. Perry is Pasadena, California-based IndyMac Bancorp's sole remaining employee, according to the filing. The company has $50 million to $100 million in assets.

Schumer Criticism

IndyMac Bancorp racked up almost $900 million in losses as home prices tumbled and foreclosures hit records. California ranked second among U.S. states, with one foreclosure filing for every 192 households in June, 2.6 times the national average.

IndyMac came under fire in June from U.S. Senator Charles Schumer, a New York Democrat, who said lax lending standards and deposits purchased from third parties left it on the brink of collapse. In the 11 business days after Schumer explained his concerns in a June 26 letter, depositors withdrew more than $1.3 billion, the Office of Thrift Supervision said.

IndyMac, with $32.01 billion in assets as of July 11, was the largest OTS-regulated savings and loan to fail and second- biggest financial institution to close behind Continental Illinois in 1984, according to the FDIC. The failure will cost the federal deposit insurance program that repays customers when a bank fails about $4 billion to $8 billion, the FDIC said in a statement last month.

The company is represented by the law firm Alston & Bird LLP in the bankruptcy case.

The company proposed that its first creditor meeting be held on Aug. 28. Creditors listed in its petition include accounting firm Ernst & Young LLP, law firm Alston & Bird, and JPMorgan Chase & Co.

The case is In re IndyMac Bancorp Inc., 08-21752, U.S. Bankruptcy Court, Central District of California (Los Angeles).

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While banks are prohibited from filing for U.S. bankruptcy protection, bank holding companies aren't. Perry is Pasadena, California-based IndyMac Bancorp's sole remaining employee, according to the filing. The company has $50 million to $100 million in assets.

Guess he's holding out for that big end of the year bonus!

This just means that when the major creditors are paid the rest of the people will be paid by US taxpayer dollars in the form of the FDIC.
"Greed is good" until the whole house of cards fall down.