Reorganization Plan Is Approved for ICA : S&Ls;: Ex-vice president of Imperial Savings’ parent company is named interim trustee in bankruptcy case.

Ignoring protests by the Internal Revenue Service and the federal Resolution Trust Corp., a U.S. bankruptcy judge has approved a reorganization plan submitted by Imperial Corp. of America, the former parent company of Imperial Savings of America.

Under the plan approved late Friday, ICA’s disposable assets are being held in a trust that also is operating ICA’s only remaining businesses, an insurance company and a data processing unit in San Diego.

Judge Louise DeCarl Malugen named Richard Lewis, a former ICA vice president, to act as interim trustee. Lewis will operate ICA’s two remaining businesses “for the foreseeable future,” according to Patrick Shea, a San Diego-based attorney who is representing ICA in the bankruptcy proceedings.

The trust also assumed responsibility for about $12 million in assets that eventually will be distributed to ICA’s creditors.

While ICA owes about $40 million to its bondholders and about $1 million to general creditors, the company has been unable to calculate its total liabilities because Malugen has yet to rule on massive claims submitted by the RTC and the IRS, Shea said Monday.

During Friday’s daylong hearing in San Diego, however, the IRS claimed that ICA might owe between $39 million and $170 million in additional taxes. The RTC has filed a claim against ICA that is “in excess of $600 million,” Shea said.

The IRS based its estimate of taxes owed by ICA on preliminary results of an ongoing audit of ICA and an ongoing U.S. District Court lawsuit in which the IRS alleges that ICA owes unspecified additional taxes on unreported profits generated during recent years.

However, because of a complicated IRS regulation, the Bankruptcy Court proceedings could free ICA from some of that potential tax liability because the reorganization was completed prior to the end of ICA’s fiscal year Sunday, Shea said.

“The RTC and IRS objected to (confirmation of the plan Friday), arguing that if the court delayed confirmation (until after Sunday) it might enable the RTC, or the IRS, to trigger taxable events in upcoming months” that would give the IRS a “priority claim” for between $39 million and $170 million in taxes, Shea said.

Malugen disagreed Friday with the IRS’ contention that ICA’s proposed reorganization was little more than a tax-avoidance scheme. Shea on Monday described the plan as a legitimate attempt at “limiting (ICA’s) tax liability under applicable law and preserving its $12 million of assets for distribution to creditors.”

ICA entered Bankruptcy Court earlier this year after federal regulators seized Imperial Savings and declared the San Diego-based S&L; to be insolvent. The RTC hopes to eventually sell the institution, which is now being operated by the RTC as Imperial Federal Savings & Loan. However, the RTC has no plans to complete a sale before the year ends, spokesman Kevin Shields said.

“The RTC is planning to sell 65 thrifts during the fourth quarter,” Shields said. “But Imperial is not on that list. . . . There are over 200 S&Ls; in conservatorships and it takes (the RTC) some time to sell a thrift.”

Shea described ICA’s Chapter 11 bankruptcy proceedings “as one of the most complicated cases I’ve ever seen. . . . There’s a lot of strange law involved (because of the federal government’s seizure of Imperial Savings), and a lot of the peculiarities in this case are going to be repeated in other S&L; (seizure) cases.”