AmTrust Defeats FDIC; Creditors May Receive $300 Million
AmTrust Financial Corp., a holding company for a failed bank, won a victory in theU.S. Court of Appeals over the Federal Deposit Insurance Corp.
The ruling means that creditors will recover at least $100 million and might take home $300 million under the liquidating Chapter 11 plan approved in November by a confirmation order from the U.S. Bankruptcy Court in Cleveland.
AmTrust first defeated the FDIC in June 2011 when a U.S. district judge ruled that the FDIC failed to prove there was a commitment for the holding company to provide capital to the bank subsidiary that subsequently failed. Had the FDIC won, its priority claim for a commitment would have come ahead of all AmTrust unsecured creditors.