MCorp May File Chapter 11 Next Month

The chairman of MCorp said the bank holding company, which has stopped paying dividends and interest on debt, could be in bankruptcy court seeking Chapter 11 protection by the end of November.

“I think everybody recognizes that there is a high probability that we will be in (Chapter 11) bankruptcy within 30 days,” Chairman Gene Bishop told the Dallas Times Herald this week. “It’s obvious that we can be forced and that we may not have any choice.

“In the interest of protecting our assets and our creditors, it’s really the only alternative.”

There had been recent industry speculation that the bank holding company, Texas’ second-largest behind NCNB Texas National Bank, was forcing the reorganization issue to advance its own plan to recapitalize.

Given 30 Days

Under Chapter 11 protection, the company would be freed from the threat of creditors’ lawsuits until it develops a plan to put its finances in order.

MCorp announced earlier this week that it would stop paying dividends to preferred shareholders and would cease payments on about $470 million in debt. That action effectively put the bank holding company’s creditors on notice that they could push MCorp into bankruptcy court after Nov. 21.

“When we made the decision last week to quit paying dividends and interest (on debt), that gives us 30 days from that date, which is Nov. 21,” Bishop said.

“It’s sometimes very hard to get the government’s attention, and I do think now that we’ve got their attention,” Bishop said. “The time clock is running now.”

MCorp proposed a recapitalization package earlier this month that would include $400 million from the bank holding company itself and $400 million raised from investors and shareholders.