Judge Hands FDIC a Big Setback in MCorp Case

A federal judge in Houston on Tuesday threw out nearly all of a $262.4-million Federal Deposit Insurance Corp. claim against MCorp, the once-giant bank holding company that is nearing the end of 2 1/2 years in bankruptcy.

U.S. District Judge Lynn N. Hughes left the FDIC with a $2.2-million claim against MCorp, apparently wiping out the agency’s standing to vote on the company’s $505-million Chapter 11 reorganization.

The company last week announced that a majority of creditors had approved the plan. The FDIC had voted against it.

Judge Hughes’ ruling was a “clear indication that the FDIC has no claim against the estate and in fact may be liable against the estate,” an MCorp spokesman said. The FDIC said it may appeal the ruling.

Dallas-based MCorp was once Texas’ second-largest bank holding company. Small creditors forced it into an involuntary bankruptcy filing on March 27, 1989.

Two days later, the FDIC closed 20 of MCorp’s 25 banks in a $2-billion bailout. The company has since sold four banks.

In September 1989, the FDIC filed $847 million in claims against MCorp. It has reduced them to $281 million. MCorp has always rejected the claims.