Bankruptcy judge rules $2.3 billion bank may be shut down
- by admin
The bankruptcy judge has ruled the bankruptcy of a Michigan bank may require it to be shuttered, but that decision may be overturned if it can be shown that the bankruptcy process is not being properly conducted.
According to a lawsuit filed by Michigan Gov.
Jennifer Granholm, the Detroit-based bank was forced to close its doors by the U.S. Justice Department in August after being accused of illegally charging people with fraudulent charges.
A bankruptcy judge issued a preliminary ruling Monday, but the final ruling is still pending.
The bank’s bankruptcy administrator, Wayne State University bankruptcy attorney Mike O’Leary, said he expects the ruling to be released sometime next week.
He said the decision will be a “disappointment” for customers, and it could result in a loss of millions of dollars in revenue.
O’Connor ruled that the bank must have the ability to comply with its creditors in its bankruptcy, but he noted that this isn’t a requirement under the Bankruptcies Reform Act.
The judge did say that if there was no agreement to discharge the bank’s creditors, it may be required to make a special offer.
But that would only require it meet a certain number of conditions and be in compliance with certain other requirements, O’Connell said.
He also said the bankruptcy administrator has to be prepared to take on the debt of its creditors.
O’Connor found that the Justice Department’s complaint was not supported by the evidence and that the court’s order was not based on law, but on a lack of legal authority.
Olin said the case isn’t over, and the court will review the case, and potentially seek additional authority to close the bank.
Granholm, a Democrat, filed the lawsuit in federal court in Detroit on behalf of the state’s creditors in March.
She has appealed that ruling to the U
The bankruptcy judge has ruled the bankruptcy of a Michigan bank may require it to be shuttered, but that decision…
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