ShoreBank Corp. Seeks Court Protection After Being Closed
ShoreBank said it had about $63.5 million in liabilities and about $19.2 million in assets in a filing yesterday in U.S. Bankruptcy Court in Chicago. Eleven of the holding company’s units also sought bankruptcy.
The bank was closed and its assets sold to Urban Partnership Bank in August 2010, after ShoreBank failed to raise the capital it had been required to by regulators. The bank, which operated 15 branches in Chicago, Cleveland and Detroit, was forced to write down asset values as residential rehabilitation loans and condominium conversion loans became delinquent.
“Many of the bank’s lending neighborhoods in Chicago, Cleveland and Detroit experienced and continue to have some of the nation’s highest unemployment rates,” ShoreBank Chief Executive Officer George Surgeon said in a court filing yesterday. “Record levels of foreclosures have devastated many of these neighborhoods and real estate values have dropped significantly.”
The holding company filed for bankruptcy after it reached an agreement with the Federal Deposit Insurance Corp. in a dispute over who was entitled to the bank’s tax refunds, according to the court filing. Under the settlement, the FDIC will receive $8.5 million.
George Panagakis, a lawyer who represents ShoreBank in the Chapter 11 case, didn’t immediately return a call to his office after regular business hours yesterday seeking comment on the bankruptcy filing.
ShoreBank, based on Chicago’s South Side, was founded in 1973. In March 2010, the bank was ordered by the FDIC to boost capital within 60 days, a deadline it missed.
The case is In re ShoreBank Corp., 12-581, U.S. Bankruptcy Court, Northern District of Illinois (Chicago).
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