MCorp Sues U.S. Over Bank Seizures
MCorp, the Texas bank holding company stripped of 20 of its 25 banks by federal regulators, filed suit Friday against the government agencies on grounds that 10 to 14 of the banks seized were not insolvent.
The lawsuit, filed against the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp., added another twist to the already complicated case that may not be resolved for months and could cost the government more than $2 billion.
“The company asserts that 10 to 14 of those banks were not in fact insolvent,” MCorp said in its lawsuit, which seeks $70 million that MCorp said it lost when the comptroller declared 20 MBanks insolvent Tuesday night.
MCorp, which was Texas’ second-largest bank holding company until its collapse, also filed a motion Friday in federal bankruptcy court in New York to convert an involuntary Chapter 7 liquidation proceeding filed against it into a Chapter 11 petition.
The Chapter 7 action, which set in motion the latest MCorp developments, was filed last week by three minor bondholders of the bank holding company.
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