Advanta Bank May Fall Into Receivership
November 9, 2009
Advanta Bank Corp. may slip into Federal Deposit Insurance Corp. receivership, according to its parent company, which filed for Chapter 11 bankruptcy protection on Sunday in Delaware.
Advanta Corp., the Spring House, Pa.-based parent which filed for bankruptcy, warned that it would not be able meet obligations to note holders of $138 million and its bank holding company may be taken over by the FDIC.
Advanta Bank Corp. "has fallen below regulatory capital requirements and over time Advanta Bank Corp. may be turned over to an FDIC receivership," Advanta Corp. stated in a press released issued on Nov. 8.
Advanta Corp., a credit-card company, has $100 million in cash and equivalents on hand. It said in the press release that the bankruptcy “is intended to address that shortfall in an orderly way that benefits stakeholders most fairly.”
The company has a total of $363 million in assets and $331 million in debt, according to court documents.
"The economic debacle over the last two years devastated Advanta's small-business customers and Advanta itself," Dennis Alter, Advanta Corp.'s chairman and chief executive, said in the press release.
In May, Advanta Bank Corp., which is not included in the Chapter 11 filing, froze customer credit-card accounts. It is attempting to collect $2.7 billion from 360,000 customers.
Advanta filed with the U.S. Bankruptcy Court for the District of Delaware. The company's bankruptcy counsel is Weil, Gotshal & Manges of New York, along with local counsel Richards, Layton & Finger of Wilmington, Del. Advanta’s financial advisor for the bankruptcy is Julie Hertzberg of Alvarez & Marsal.
Judge Kevin Carey is overseeing the case, filed as No. 09-13931.
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