Bloom v. Federal Deposit Insurance Corporation

UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW MEXICO
In re: 	FIRST STATE BANCORPORATION, 	No. 7-11-11916 JA
Debtor.
LINDA S. BLOOM, as Chapter 7 Trustee
for First State Bancorporation,
Plaintiff,
v. 	Adversary No. 13-1033 J
FEDERAL DEPOSIT INSURANCE
CORPORATION, as receiver for
First Community Bank,
Defendant.
MEMORANDUM OPINION
THIS MATTER is before the Court on the Motion to Dismiss Count I of Trustee’s
Complaint (“Motion to Dismiss Count I”) filed by the Federal Deposit Insurance Corporation, as
receiver (“FDIC-R”) for First Community Bank, Taos, New Mexico (“Bank”). See Docket No.
23. The Court heard oral argument on the Motion to Dismiss Count I and took the matter under
advisement. The Debtor, First State Bancorporation (“Bancorp”), is a bank holding company for
the Bank. FDIC-R filed a proof of claim in Bancorp’s bankruptcy case asserting an unsecured
priority claim under 11 U.S.C. § 507(a)(9) in the amount of $63,821,000.00 based on an alleged
commitment to maintain the capital of the Bank. Linda S. Bloom, the Chapter 7 Trustee in
Bancorp’s bankruptcy case, filed this adversary proceeding objecting to FDIC-R’s proof of claim
(Count I) and seeking to avoid Bancorp’s alleged commitment to maintain the capital of the
Bank as a constructively fraudulent transfer under 11 U.S.C. § 548 (Count II). See Complaint for
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Avoidance of Fraudulent Conveyance and Objection to Claim No. 9-1 (the “Complaint”) –
Docket No. 1.
Count I of the Complaint asserts five grounds in support of the Trustee’s objection to
FDIC-R’s claim: 1) none of the documents that FDIC-R relies upon in support of its claim
commits Bancorp to be liable for the shortfall in the Bank’s capital (i.e., Bancorp did not make a
commitment to maintain the capital of the Bank); 2) even if Bancorp made a commitment to
maintain the capital of the Bank, the commitment was not made to a “Federal Depository
Institutions Regulatory Agency” under 11 U.S.C. § 507(a)(9); 3) any commitment to maintain
the capital of the Bank terminated pre-petition when the Bank was placed in receivership; 4)
FDIC-R lacks standing to enforce the alleged commitment to maintain the capital of the Bank;
and 5) FDIC-R failed to timely file its proof of claim. FDIC-R’s Motion to Dismiss Count I
addresses each of these theories.
After considering the Motion to Dismiss Count I, the Trustee’s response, and the FDIC-
R’s reply, as well as counsel’s oral arguments, the relevant case law, and the applicable statutes,
the Court finds for the reasons set forth below that all but one of the Trustee’s theories fail as a
matter of law. The Court will, therefore, grant, in part, and deny, in part the Motion to Dismiss
Count I.
A. The Standards for Considering a Motion to Dismiss and Whether the Court Must
Turn the Motion to Dismiss into a Motion for Summary Judgment
The Court reviews a motion to dismiss for failure to state a claim upon which relief can
be granted under Fed.R.Civ.P. 12(b)(6) by accepting as true all well-pleaded facts in the
Complaint and viewing those facts in the light most favorable to the non-moving party. See
Alvarado v. KOB-TV, L.L.C., 493 F.3d 1210, 1215 (10 th Cir. 2007)(stating that under
Fed.R.Civ.P. 12(b)(6), the Court “must accept all the well-pleaded allegations of the complaint
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as true and must construe them in the light most favorable to the plaintiff.”)(citation and internal
quotation marks omitted). To survive a motion to dismiss under Fed.R.Civ.P. 12(b)(6), the
complaint must contain enough facts to state a cause of action that is “plausible on its face.” Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). “A claim
has facial plausibility when the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal,
556 U.S.662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009)(citing Twombly, 550 U.S. at 556).
The Court’s function in deciding a 12(b)(6) motion is “to assess whether the plaintiff’s
complaint alone is legally sufficient to state a claim for which relief may be granted.” Dubbs v.
Head Start, Inc., 336 F.3d 1194, 1201 (10 th Cir. 2003)(citations and quotation marks omitted).
Thus the Court ordinarily may not consider documents outside the four corners of the complaint
to resolve a 12(b)(6) motion without converting the motion into a motion for summary judgment.
See Fed.R.Civ.P. 12(d)(“If, on a motion under Rule 12(b)(6) . . . matters outside the pleadings
are presented and not excluded by the court, the motion must be treated as one for summary
judgment . . . .”); GFF Corp. v. Associated Wholesale Grocers, Inc., 130 F.3d 1381, 1384 (10 th
Cir. 1997)(“The failure to convert a 12(b)(6) motion to one for summary judgment where a court
does not exclude outside materials is reversible error unless the dismissal can be justified without
considering the outside materials.”)(citation omitted). But if a document is central to a plaintiff’s
claims, is referenced by the plaintiff in the complaint, and is not disputed with respect to its
authenticity, the Court may consider the document on a motion to dismiss without converting the
motion to dismiss into a motion for summary judgment. Alvarado v. KOB-TV, 493 F.3d at 1215
(“[N]otwithstanding the usual rule that a court should consider no evidence beyond the pleadings
on a Rule 12(b)(6) motion to dismiss, ‘the district court may consider documents referred to in
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the complaint if the documents are central to the plaintiff’s claim and the parties do not dispute
the documents’ authenticity.’”)(quoting Jacobsen v. Deseret Book Co, 287 F.3d 936, 941 (10 th
Cir. 2002)); GFF Corp. v. Wholesale Grocers, 130 F.3d at1384 (“Notwithstanding these general
principles, if a plaintiff does not incorporate by reference or attach a document to its complaint,
but the document is referred to in the complaint and is central to the plaintiff’s claim, a defendant
may submit an indisputably authentic copy to the court to be considered on a motion to
dismiss.”)(citations omitted). While the Court may consider these types of documents in ruling
on a motion to dismiss, it is not required to do so. Prager v. LaFaver, 180 F.3d 1185, 1189 (10 th
Cir. 1999)(finding that GFF does not require the court to consider documents attached to a
motion to dismiss that plaintiff referenced in its complaint, and collecting cases which indicate
that “courts have discretion in deciding whether to consider such materials.”)(citations omitted);
Midas Auto Sales, Inc. v. Holley (In re Holley), 2013 WL 1912666, *1 (Bankr.D.N.M. May 9,
2013)(“The Court has broad discretion to refuse to accept the extra-pleading materials and
resolve the motion solely on the basis of the pleading itself.”)(citations omitted).
FDIC-R did not attach any documents to its Motion to Dismiss Count I, but references in
its Motion to Dismiss Count I several documents that it attached to its proof of claim filed in
Bancorp’s bankruptcy case. Specifically, the Motion to Dismiss Count I references the
following documents:
A. 	Bancorp’s Securities and Exchange Commission Form 10-Q dated May 17, 2010
(the “May 10-Q”).
B. 	Letter from the Federal Reserve Bank of Kansas City to Bancorp dated May 25,
2010 (the “May 25, 2010 Letter”).
C. 	A letter dated June 14, 2010 from the Bank to The Federal Reserve Bank of
Kansas City and to the Financial Institutions Division, State of New Mexico
enclosing the capital restoration plan (the “June 14, 2010 Letter”).
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D. 	The capital restoration plan for Bancorp and the Bank dated June 2010 (the
“Capital Restoration Plan”).
E. 	The Bank Holding Company Resolution dated June 14, 2010 (“Bancorp’s Board
Resolution”).
F. 	The Prompt Corrective Action Directive issued by the Board of Governors of the
Federal Reserve System with respect to the Bank dated August 26, 2010 (the
“Prompt Corrective Action Directive”).
G. 	Bancorp’s Securities and Exchange Commission Form 10-Q dated November 10,
2010 (“Bancorp’s November 10-Q”).
A copy of each of these documents is attached to FDIC-R’s proof of claim. See Claim
No. 9-2 filed in Bancorp’s bankruptcy case. Also attached to FDIC-R’s proof of claim is a copy
of a Written Agreement by and among Bancorp, the Bank, the Federal Reserve Bank of Kansas
City and the New Mexico Regulation and Licensing Department, Financial Institutions Division
dated July 2, 2009 (the “July 2, 2009 Written Agreement” ). See Claim No. 9-2 – Exhibit A.
The Trustee’s Complaint, though it does not attach any documents as exhibits, also references all
of the documents attached to FDIC-R’s proof of claim, except for the May 10-Q:
A. May 25, 2010 Letter – Complaint ¶ 24.
B. June 14, 2010 Letter – Complaint ¶ 27.
C. The Capital Restoration Plan – Complaint, ¶¶ 28 and 29.
D. Bancorp’s Resolution – Complaint ¶ 30.
E. 	Prompt Corrective Action Directive – Complaint ¶ 32.
F. 	Bancorp’s November 10-Q – Complaint ¶ 34.
G. July 2, 2009 Written Agreement – Complaint ¶ 19.
At the oral argument on the Motion to Dismiss Count I, the Court asked counsel for the
Trustee whether she contested the authenticity of any of the documents upon which FDIC-R
relies in its Motion to Dismiss Count I. Counsel for the Trustee conceded that she did not
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question the authenticity of the documents, but disputes their meaning, and maintains that the
documents do not tell the complete story. She points out that it would be unusual at this stage in
the proceeding, where discovery has not been completed, for the Court to consider documents
outside the Complaint in ruling on the Motion to Dismiss Count I. The Court indicated at the
close of the hearing that it would consider whether to convert the Motion to Dismiss Count I into
a motion for summary judgment and afford the parties time to submit additional documents and
to file additional briefs. However, after reviewing the Motion to Dismiss Count I in light of the
Complaint and the FDIC-R’s proof of claim, the Court has determined that it is appropriate to
consider the above listed documents referenced in the Complaint, except the May 10-Q, in ruling
on the Motion to Dismiss Count I without converting the motion into a motion for summary
judgment. The documents are central to the Trustee’s claim with respect to the alleged capital
maintenance guaranty. She does not contest the authenticity of the documents and references the
documents in her Complaint.
B. Facts Raised in the Complaint and Supported by Documents Referenced in the
Complaint
Bank was wholly owned by Bancorp. (Complaint ¶ 10).1 The Federal Reserve Bank of
Kansas City (the “Federal Reserve Bank”) supervised the Bank, under delegated authority from
the Board of Governors of the Federal Reserve System (the “Board of Governors”). (Complaint
¶ 12). From 2007 to 2009 the capital of Bancorp and the Bank eroded, and in July of 2009
Bancorp and the Bank entered into the July 2, 2009 Written Agreement to address insufficient
capital of Bancorp and the Bank on a consolidated basis. (Complaint ¶ 19). The Federal Reserve
Bank downgraded the Bank’s CAMELS2 composite rating as of August 2009 to level 5.
1The Court accepts the allegations of the Complaint as true for purposes of ruling on the Motion to Dismiss Count I.
2CAMELS is the rating system the FDIC uses to rate the financial condition of federally insured depository
institutions. See Schoenmann v. Fed. Deposit Ins. Corp., 2012 WL 3834943, *1 n. 4 (N.D.Cal. Sept. 4, 2012). The
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(Complaint ¶ 21). As of Mach 31, 2010, the Federal Reserve Bank notified Bancorp that the
Bank was “undercapitalized” for purposes of 12 U.S.C. § 1831o and Subpart D of Regulation H
(12 C.F.R. Part 208, Subpart D), and required the Bank to submit a capital restoration plan which
must include Bancorp’s “guarantee that the Bank will fully comply with the [capital restoration]
plan until such time as the Bank maintains adequately capitalized capital ratios for four
consecutive calendar quarters and . . . appropriate assurances of performance by [Bancorp] under
the guarantee.” ). See May 25, 2010 Letter and Complaint ¶¶ 23 - 25. The May 25, 2010 letter
provided further that Bancorp:
Provide to the [Federal] Reserve Bank a written commitment to take all of the actions
required by the capital restoration plan and any other actions that are necessary to ensure
that the plan is fully implemented by the Bank.
Bancorp and the Bank prepared a capital restoration plan (the “Capital Restoration Plan”) in June
of 2010 which the Bank submitted to the Federal Reserve Bank and to the Financial Institutions
Division, State of New Mexico on June 14, 2010. See June 14, 2010 Letter. The major
components of the Capital Restoration Plan consisted of the following:
1. 	Securing the commitment of a substantial investor for up to 24.9% of the total capital
to be raised, with 9.9% in voting common stock and up to an additional 15% in non-
voting stock.
2. 	A private offering for new common equity from 25-40 investors, in an amount of
$250 – 300 million in total to be accomplished with the assistance of Goldman Sachs.
The total raised will include the amount secured from the substantial investor in item
number 1 above.
3. 	Retirement of a significant majority of [Bancorp’s] Trust Preferred debt at a
substantial discount, with the assistance of Hexagon Securities.
Capital Restoration Plan; See also, Complaint ¶ 29.
six components of a CAMELS rating are: “Capital Adequacy,” “Asset Quality,” “Management,” “Earnings,”
“Liquidity,” and “Sensitivity to Market Risk.” American Capital Corp. v. United States, 63 Fed.Cl. 637, 693 n.40
(Fed.Cl. 2005).
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The projected timeline for implementing the Capital Restoration Plan estimated a completion
date of September 30, 2010 for “[c]losing of the TruPS redemption and capital raise.” Id. The
Capital Restoration Plan also stated, based on an assessment performed by the principals of Mill
Creek Capital, that “it is reasonable to believe that a capital infusion into the bank of $200-240
million should be sufficient to allow the bank to maintain a well capitalized position as it
continues through the current business cycle” and that “it is believed that the pro-forma rates of
return that should be achievable are sufficient to attract sophisticated, knowledgeable investors
who would be capable of providing funds sufficient to raise the targeted amount of capital.” Id.
Finally, the Capital Restoration Plan stated that if the retirement of Bancorp’s trust preferred debt
“is not proceeding more or less as planned, an alternative structure that could allow for capital
injection directly into the Bank is being evaluated” and that “[t]he status of the TruPS
redemption will be evaluated in early July and a decision made at that point about the viability of
pursuing this alternative.” Id.
Bancorp’s Board Resolution was included as part of the Capital Restoration Plan.
Bancorp’s Board Resolution ensured compliance with the Capital Restoration Plan, and contains
the following recitals:
Each company having control of an insured depository institution that is undercapitalized
must: (1) guarantee that the institution will comply with its capital restoration plan until
the institution has been adequately capitalized on average during each of four consecutive
calendar quarters; and 2) provide appropriate assurances of performance, in order for the
institution’s primary federal regulator to accept the institution’s capital restoration plan.
[Bancorp] desires to execute this Resolution in order to provide an adequate guarantee of
the Capital [Restoration] Plan so that the Board of Governors may accept the Capital
[Restoration] Plan.
Bancorp’s Board Resolution also contains the following resolutions:
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[Bancorp] shall take all actions required of it under the Capital [Restoration] Plan,
including but not limited to raising a minimum of $200 million in capital in a private
offering to be injected into the Bank;
[Bancorp] shall ensure that the Bank complies with each of the requirements prescribed
by Section 38 and Regulation H, and any other requirement impose on the Bank by the
Board of Governors pursuant to section 38 and Regulation H;
[Bancorp] shall take no action to diminish the capital level of the Bank. Specifically
[Bancorp] shall ensure that the Bank will not pay dividends, until such time as it is
adequately capitalized within the meaning of Section 38 and Regulation H;
[Bancorp] hereby acknowledges that its guarantee of the Capital [Restoration] Plan as set
forth in this Resolution and the Written Agreement dated July 2, 2009 between [Bancorp]
and the Federal Reserve Bank of Kansas City shall constitute a commitment to the Board
of Governors to maintain the capital of the Bank, as set forth in section 365(o) of the
United States Bankruptcy Code (11 U.S.C. § 365(o)).
The Prompt Corrective Action Directive issued by the Bank and the Board of Governors
confirmed that the Board of Governors determined that the Bank was “significantly
undercapitalized” for purposes of 12 U.S.C. § 1831o, and that the Board of Governors had
accepted the Capital Restoration Plan dated June 14, 2010. (Complaint ¶ 32).
Bancorp’s efforts to carry out the Capital Restoration Plan included the following: a)
initiating repurchase offers for all of the outstanding trust preferred securities debt at a significant
discount to par value; and b) engaging an investment banking firm to bring in investor groups
for a potential whole bank repurchase. (Complaint ¶¶ 35 and 36). The trust preferred securities
holders did not accept the repurchase offers and Bancorp had no authority to force the trust
preferred securities holders to accept the discounted offers. (Complaint ¶ 35). Bancorp proposed
a transaction with a single private equity firm called Mill Creek Capital which would raise
sufficient funds from its investors to satisfy the capital raising terms of the Capital Restoration
Plan and dilute Bancorp’s holdings in the Bank to one percent (the “Mill Creek Transaction”).
(Complaint ¶ 36). The Federal Deposit Insurance Corporation did not select the Mill Creek
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Transaction “as it preferred a whole bank purchase by another bidder with whom it had been
negotiating a purchase and assumption agreement.” Complaint, ¶ 36.
The Federal Deposit Insurance Corporation closed the Bank and was appointed as
receiver for the Bank on January 28, 2011. (Complaint ¶ 37). The same day FDIC-R entered
into a purchase and assumption agreement with U.S. Bank, National Association, to purchase the
Bank’s assets and assume the Bank’s debts. (Complaint ¶ 37). Bancorp filed a voluntary petition
under Chapter 7 of the Bankruptcy Code on April 27, 2011. (Complaint ¶ 38). Linda S. Bloom
was appointed the Chapter 7 Trustee. (Complaint ¶ 38). FDIC-R filed its proof of claim based
on Bancorp’s alleged commitment to maintain the capital of the Bank on October 24, 2011.
(Complaint ¶ 40). FDIC-R amended its claim on January 4, 2013. (Complaint ¶ 40).
C. Claims Asserted in Count I
1) 	Whether Bancorp Made a Commitment to Maintain the Capital of the Bank
In support of its position that Bancorp made a commitment to maintain the capital of the
Bank, FDIC-R relies in part on the language contained in Bancorp’s Board Resolution which
provided that Bancorp’s “guarantee of the Capital Plan . . . shall constitute a commitment to the
Board of Governors to maintain the capital of the Bank, as set forth in section 365(o) of the
United States Bankruptcy Code (11 U.S.C. § 365(o)).” See Bancorp’s Resolution. This
language tracks the language found in 11 U.S.C. § 365(o):
In a case under chapter 11 of this title, the trustee shall be deemed to have assumed
(consistent with the debtor’s other obligations under section 507), and shall
immediately cure any deficit under, any commitment by the debtor to a Federal
depository institutions regulatory agency (or predecessor to such agency) to maintain
the capital of an insured depository institution, and any claim for a subsequent breach
of the obligations thereunder shall be entitled to priority under section 507. This
subsection shall not extend any commitment that would otherwise be terminated by any
act of such an agency.
11 U.S.C. § 365(o).
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Courts interpreting this Code section, including the Tenth Circuit, conclude that a debtor who has
made a commitment to maintain the capital of a failed depository institution must immediately
cure any deficit under the commitment as a condition to remaining in Chapter 11. See, e.g., In re
Overland Park Fin. Corp., 236 F.3d 1246, 1253 (10 th Cir. 2001)(holding that, “before a debtor
may proceed with Chapter 11, and acquire Chapter 11 protection, the debtor’s commitment to
assume and cure its capital deficit must be satisfied.”); Resolution Trust Corp. v. Firstcorp, Inc.
(In re Firstcorp, Inc.), 973 F.2d 243, 247 (4 th Cir. 1992)(“We think that the meaning and
function of § 365(o) is plain from its language: in every Chapter 11 case, the trustee . . . ‘shall be
deemed to have assumed’ any capital maintenance commitment made by the debtor, and if a
deficit under such commitment arises, he ‘shall immediately cure [it].’”)(quoting § 365(o));
Franklin Sav. Corp. v. Office of Thrift Supervision, 303 B.R. 488, 502 (D.Kan. 2004)(“Section
365(o) explicitly requires a cure of any capital maintenance commitment, and Firstcorp and
Overland Park Financial both hold that this cure is a prerequisite to Chapter 11.”). The
consequence of failing to satisfy the requirements of 11 U.S.C. § 365(o) is conversion to Chapter
7. See Firstcorp, 973 F.2d at 248 (concluding “that assumption of a capital maintenance
obligation and cure of a deficit under such an obligation are pre-requisites to reorganization
under Chapter 11[;]” and observing further that § 365(o) denies a holding company that is not
able to satisfy its capital maintenance obligations the “opportunity to reorganize under Chapter
11, leaving liquidation under Chapter 7 as its only option.”); Franklin, 303 B.R. at 502 (“The
remedy for a debtor’s inability to cure the capital deficiency is that the debtor may be prohibited
from proceeding under Chapter 11.”).
Section 365(o) is inapplicable here because Bancorp is not attempting to reorganize under
Chapter 11. The policy argument that Chapter 11 cannot be used by a bank holding company
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that has made a commitment to maintain the capital of its subsidiary bank “to jettison the
subsidiary in an effort to enhance its own financial position and that of its creditors,” is not
applicable in a Chapter 7 liquidation case. Firstcorp, 973 F.2d at 248. See also, H.R.Rep. No.
681(1), 101 st Cong., 2d Sess. 179 (1990), reprinted in 1990 U.S.C.C.A.N. 6572, 6585 (the
purpose of 11 U.S.C. § 365(o) is “to prevent institution-affiliated parties from using bankruptcy
to evade commitments to maintain capital reserve requirements of a Federally insured depository
institution.”).
Even though 11 U.S.C. § 365(o) has no application in Chapter 7 cases, the “commitment
to maintain the capital” language found in 11 U.S.C. § 365(o) is likewise found in 11 U.S.C. §
507(a)(9), which establishes the priority of claims in chapter 7, 11, 12 and 13 cases. See 11
U.S.C. § 103(a)(chapters 1, 3, and 5 of this title apply in a case under chapter 7, 11, 12, or 13 of
this title . . .”). That section provides:
Ninth, allowed unsecured claims based upon any commitment by the debtor to a
Federal depository institutions regulatory agency (or predecessor to such agency)
to maintain the capital of an insured depository institution.
11 U.S.C. § 507(a)(9).3
The language in the Board Resolution tracks this same language, notwithstanding its reference to
11 U.S.C. § 365(o). See Board Resolution (Bancorp “acknowledges that its guarantee of the
Capital Plan as set forth in this Resolution and the Written Agreement dated July 2, 2009 . . .
shall constitute a commitment to the Board of Governors to maintain the capital of the
Bank, as set forth in section 365(o) of the United States Bankruptcy Code (11 U.S.C. §
365(o)).”).
3To be accepted by the applicable regulatory agency, a capital restoration plan required by FIRREA must be “likely
to succeed in restoring the institution’s capital.” 12 U.S.C. § 1831o(e)(2)(C)(i)(II). A bank holding company’s
guaranty of a capital restoration plan for an undercapitalized institution continues “until the institution has been
adequately capitalized on average during each of 4 consecutive calendar quarters.” 12 U.S.C. §
1831o(e)(2)(C)(ii)(I). A requirement to restore the capital for four consecutive calendar quarters equates to a
requirement to maintain an institution’s capital.
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In Overland Park, the Tenth Circuit construed the meaning of “commitment” for
purposes of 11 U.S.C. § 365(o). Overland Park, 236 F.3d at 1252. The Tenth Circuit rejected
the idea that “any commitment by the debtor . . . to maintain the capital” under § 365(o) requires
that the commitment “be contractual, executory, [or] formal[.]” Id. Instead, a commitment,
based on its common definition, simply requires an “‘[a]greement or pledge to do something.’”
Id. (quoting Firstcorp. 973 F.2d at 249 n. 5)(quoting Black’s Law Dictionary 248 (5 th Ed.
1979)(additional internal quotation marks omitted)). The Tenth Circuit concluded that the
mandatory, unequivocal language contained in a stipulation signed by the debtor’s president
constituted a “unilateral pledge to maintain . . . [the bank’s] capital” that qualified as a
commitment for purposes of 11 U.S.C. § 365(o). Id. at 1253.
The Trustee contends that Bancorp did not make a commitment to maintain the capital of
the Bank because none of the documents that FDIC-R relies upon in support of its claim obligate
Bancorp to infuse its own capital to restore the capital of the Bank. Several of the cases that the
Trustee relies upon do appear to focus on whether the alleged commitment required the bank
holding company to infuse its own capital. See, e.g., Firstcorp, 973 F.2d at 244 and 249 (finding
a commitment to maintain capital where the language required the infusion of sufficient
additional equity capital); In re Colonial BancGroup, Inc., 436 B.R. 713, 733 (Bankr.M.D.Ala.
2010)(finding no commitment to maintain capital where “[t]he language in the three documents
did not require the Debtor to maintain the net worth of the Bank or to infuse additional capital as
necessary . . . ”); In re Vineyard Nat’l Bancorp., 2013 WL 1867986, *4 (Bankr.C.D.Cal. May 3,
2013)(finding no commitment to maintain capital where there was no “commitment that binds
the Debtor to infuse capital to the Bank.”). Even in Overland Park, the stipulation at issue
“evince[d] [the debtor’s] understanding [that] it is obligated to maintain, and if necessary infuse,
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capital in order to ensure . . . compliance with federal regulatory code.” Overland Park, 236
F.3d at 1253-1254. But nothing in 11 U.S.C. § 365(o) or 11 U.S.C. § 507(a)(9) requires “a
commitment to ‘infuse equity capital’” in order to constitute a commitment to maintain the
capital of an FDIC-insured bank. Fed. Deposit Ins. Corp. v. Amtrust Fin. Corp., 2011 WL
334976, *9 (N.D.Ohio Jan. 31, 2011), aff’d, 694 F.3d 741 (6th Cir. 2012).
Section 507(a)(9) gives priority status to “any commitment” to maintain an insured
depository institution’s capital. 11 U.S.C. § 507(a)(9). See also, Vineyard, 2013 WL 1867986 at
* 2 (acknowledging that “[t]he ‘commitment’ can be ‘any commitment.’”). To determine
whether Bancorp made a commitment to maintain the capital of the Bank, the Court is guided by
Overland Park’s simple requirement that a commitment to maintain the capital may take the
form of a pledge or commitment to do something, and need not take the form of a contract.
Overland Park, 236 F.3d at 1252. To complete this task, the Court must examine the language
contained in the documents, and, because the Board Resolution references the Capital
Restoration Plan and the July 2, 2009 Written Agreement, it is appropriate to consider all of
these documents together to interpret its meaning. Cf. Restatement (Second) of Contracts, §
209(1) (1981)(“An integrated agreement is a writing or writings constituting a final expression of
one or more terms of an agreement.”). Reading the Board Resolution together with the Capital
Restoration Plan and the July 2, 2009 Written Agreement, the Court concludes that Bancorp
made a commitment to maintain the capital of the Bank.
As noted above, the language in the Board Resolution uses the same words found in 11
U.S.C. § 507(a). The Board Resolution also contains the following recitals and resolutions:
WHEREAS . . . each company having control of an insured depository institution
that is undercapitalized must: (1) guarantee that the institution will comply with
its capital restoration plan . . . and (1) provide appropriate assurance of
performance . . .
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WHEREAS BHC [Bancorp] desires to execute this Resolution in order to provide
an adequate guarantee of the Capital [Restoration] Plan so that the Board of
Governors may accept the Capital [Restoration] Plan.
RESOLVED, that . . . BHC [Bancorp] shall ensure that: (1) all actions required by
the Capital Plan are taken by the Bank and BHC [Bancorp]; and (2) the Capital
[Restoration] Plan is fully implemented.
RESOLVED, that BHC [Bancorp] shall take all actions required of it under the
Capital Plan, including but not limited to raising a minimum of $200 million in
capital in a private offering to be injected into the Bank.
Board Resolution.
Bancorp is a party to the July 2, 2009 Written Agreement. The July 2, 2009 Written Agreement
required Bancorp to submit an acceptable written plan to address “the source and timing of
additional funds to fulfill the consolidated organization’s and the Bank’s future capital
requirements.” July 2, 2009 Written Agreement, p. 7. The Capital Restoration Plan
contemplates that the Bank’s capital will be restored by raising capital from third-party sources,
and by retiring the Bank’s “Trust Preferred debt at a substantial discount.” See Capital
Restoration Plan. The Capital Restoration Plan also contemplates that if the effort to retire trust
preferred debt is “not proceeding more or less as planned, an alternative structure that could
allow for a capital injection directly into the Bank is being evaluated.” Id. at Conclusions, ¶ 4.
The Board Resolution, read together with the July 2, 2009 Written Agreement and the Capital
Restoration Plan indicate that Bancorp pledged to ensure that the terms of the Capital Restoration
Plan are carried out. The Board Resolution clearly states that Bancorp executed the Board
Resolution “to provide an adequate guarantee of the Capital Plan so that the Board of Governors
may accept the Capital Plan.” And, by statute, the Board of Governors can accept a proposed
capital restoration plan only if it includes the bank holding company’s guaranty. See 12 U.S.C. §
1831o(e)(2)(C)(“The appropriate Federal banking agency shall not accept a capital restoration
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plan unless the agency determines that . . . . if the insured depository institution is
undercapitalized, each company having control of the institution has (I) guaranteed that the
institution will comply with the plan until the institution has been adequately capitalized on
average during each of 4 consecutive calendar quarters and (II) provided appropriate assurances
of performance.”). Cf. Wolkowitz v. Fed. Deposit Ins. Corp. (In re Imperial Credit Indus., Inc.,),
527 F.3d 959, 967 (9th Cir. 2008)(finding an enforceable guaranty existed where “[t]he language
of the performance guaranty clearly demonstrates that [the bank holding company] intended to
comply with the statutory framework governing undercapitalized institutions . . . . [and that it]
was fully aware that an enforceable performance guarantee was required in order for the FDIC to
approve [the bank’s] capital plan . . .”). The Board Resolution not only tracks the language
contained in the statute, but also uses guaranty language and evidences an intent to comply with
the statutory requirements necessary to obtain approval of the proposed capital restoration plan.
Based on this language the Court concludes that Bancorp has made a commitment to maintain
the capital of the Bank for purposes of 11 U.S.C. § 507(a)(9).
Having determined that the language in the relevant documents is sufficient to constitute
a commitment to maintain the capital of the Bank, FDIC-R would have the Court conclude that
Count I must be dismissed. This Court disagrees. Concluding that Bancorp made a commitment
to maintain the capital of the Bank does not end the inquiry. To sustain a claim based on a
commitment to maintain the capital, Bancorp must have breached that commitment. The
Complaint contains the following allegations:
As the approximately $100 million in trust preferred securities debt remained on the
Debtor’s books, the Debtor struggled to close a deal with third party investors to
adequately capitalize the Bank. The Debtor’s efforts included engaging an investment
banking firm, which brought in 13 investor groups for a potential whole bank purchase,
each of which declined to go forward, as well as 8 private equity firms that performed
diligence on a private placement transaction, with a single private equity firm called Mill
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Creek Capital raising enough funds from its investors to satisfy the capital raising terms
of the Capital Restoration Plan (“Mill Creek Transaction”). The proposed Mill Creek
Transaction involved the capital investors purchasing 2,227500 shares of common stock
for $210 million, in which the Debtor’s holdings in the Bank would be diluted to just 1
per cent. The Debtor’s board decided it was in its shareholders’ and long-standing bank
customers’ best interest for it to hold 1 percent of a recapitalized Bank than 100 percent
of a failed Bank. However, the Mill [Creek] Transaction was not selected by the Federal
Deposit Insurance Company, as it preferred a whole bank purchase by another bidder
with whom it had been negotiating a purchase and assumption agreement.
Complaint, ¶ 36.
The Debtor complied with its obligations under the Capital Restoration Plan and the
Board Resolution.
Complaint, ¶ 47.
The gravamen of the Capital Restoration Plan that was approved by the Board of
Governors was the Debtor assisting the Bank by agreeing to take affirmative steps to try
and retire $100 million in debt and raise in excess of $200 million in third party capital.
The steps for such efforts were set out in the Capital Restoration Plan and approved by
the Board of Governors. In its proof of claim, the FDIC-R does not state that the Debtor
failed to take any of these steps under the Capital Restoration Plan and Board Resolution,
as it cannot.
Complaint, ¶ 55.
These allegations sufficiently state a plausible claim that Bancorp did not, in fact, breach its
commitment to maintain the capital of the Bank, particularly in light of the alternative structure
contemplated by the Capital Restoration Plan. See Capital Restoration Plan, Conclusions, ¶ 4. If
Bancorp can demonstrate that it was able to raise sufficient funds to restore the capital of the
Bank at a level committed under the terms of the Capital Restoration Plan in accordance with the
terms of the Capital Restoration Plan, Bancorp can defeat FDIC-R’s claim based on a lack of
breach. Consistent with the claims objection process set out in 11 U.S.C. § 502, the Court will
allow a claim “except to the extent that such claim is unenforceable against the debtor . . . under
any agreement or applicable law.” 11 U.S.C. § 502(b)(1). As noted by the Tenth Circuit in
Overland Park, a debtor who has made a commitment to maintain the capital of an FDIC-insured
institution should be “held to its commitment absent a defense.” Overland Park, 236 F.3d at
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1253. Bancorp’s defense is the lack of breach. If Bancorp did not breach its commitment under
the Board Resolution and the Capital Restoration Plan, or if FDIC-R wrongfully prevented
Bancorp from carrying out its commitment, FDIC-R’s claim would not be enforceable. Cf.
Vineyard, 2013 WL 1867986 at *4 (finding, alternatively, that even if the applicable documents
sufficiently established a “commitment” under §365(o), there was “no breach of such
commitment that would support a priority claim under § 507(a)(9) . . . . there was no evidence
that the Debtor abandoned efforts to raise the funds to implement a capital plan nor was there a
deadline to do so.”). The Court will not, therefore, dismiss Count I based on the fact that
Bancorp made a commitment to maintain the capital of the Bank within the meaning of 11
U.S.C. § 570(a)(9).
2) 	Whether the Commitment to Maintain the Capital of the Bank was Made to a
“Federal Depository Institutions Regulatory Agency” for purposes of 11
U.S.C. § 507(a)(9)
FDIC-R bases its claim on 11 U.S.C. § 507(a)(9), which gives ninth priority in Chapter 7
cases to “allowed unsecured claims based upon any commitment by the debtor to a Federal
depository institutions regulatory agency (or predecessor to such agency) to maintain the capital
of an insured depository institution.” 11 U.S.C. § 507(a)(9). The Bankruptcy Code defines
“Federal depository institutions regulatory agency” as follows:
(A) with respect to an insured depository institution (as defined in section 3(c)(2)
of the Federal Deposit Insurance Act) for which no conservator has been
appointed, the appropriate Federal banking agency (as defined in section 3(q)
of such Act);
(B) with respect to an insured credit union (including an insured credit union for
which the National Credit Union Administration has been appointed
conservator or liquidating agent), the National Credit Union Administration;
(C) with respect to any insured depository institution for which the Resolution
Trust Corporation has been appointed conservator or receiver, the Resolution
Trust Corporation; and
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(D) with respect to any insured depository institution for which the Federal
Deposit Insurance Corporation has been appointed conservator or receiver, the
Federal Deposit Insurance Corporation.
11 U.S.C. § 101(21B).
The Federal Deposit Insurance Act (“FDIA”) defines “insured depository institution” as:
any bank or savings association the deposits of which are insured by the Corporation
[FDIC] 4 pursuant to this chapter.
12 U.S.C. § 1813(c)(2).
For State member banks, the “appropriate Federal banking agency” is the “Board of Governors
of the Federal Reserve System.” See 12 U.S.C. § 1813(q)(3)(A)(“The term ‘appropriate Federal
banking agency’ means-- . . . . the Board of Governors of the Federal Reserve System, in the
case of any State member bank”).
The Bank is a State member bank. See Complaint, ¶ 11. The Trustee asserts that because
creditors’ rights are generally fixed as of the petition date, and because the FDIC-R had been
appointed receiver of the Bank as of the petition date, the Bankruptcy Code’s applicable
definitional section is 11 U.S.C. § 101(21B)(D) such that commitment must have been made to
the Federal Deposit Insurance Corporation rather than the Board of Governors in order to give
rise to a priority claim under 11 U.S.C. § 507(a)(9). See 11 U.S.C. § 101(21B)(D). This Court
disagrees.
The alleged commitment is contained in Bancorp’s Board Resolution dated June 4, 2010.
At that time, the Bank was a state member bank for which FDIC had not been appointed as
receiver. Thus when the commitment was made, the “appropriate federal banking agency” under
the FDIA, and the consequent “federal depository regulatory agency” for purposes of 11 U.S.C.
4For purposes of the FDIA the Federal Deposit Insurance Corporation is referred to as the “Corporation.” 12 U.S.C.
§ 1811(a)(“There is hereby established a Federal Deposit Insurance Corporation (hereinafter referred to as the
‘Corporation’) which shall insure . . . the deposits of all banks . . . which are entitled to the benefits of insurance
under this chapter . . .”).
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§ 507(a)(9) was the Board of Governors of the Federal Reserve System. See 11 U.S.C. §
101(21B)(A); 12 U.S.C. § 1813(q)(3)(A). Bancorp and the Bank together submitted the Capital
Restoration Plan to the Federal Reserve Bank and to the Financial Institutions Division of the
State of New Mexico. The Board Resolution recites that: a) the Bank has submitted a capital
restoration plan to the Board of Governors; and b) that Bancorp “desires to execute this
Resolution in order to provide adequate guarantee of the Capital Plan so that the Board of
Governors may accept the Capital Plan.” Bancorp’s Board Resolution. Bancorp’s Board
Resolution further states that its guaranty is “a commitment to the Board of Governors.” Id. The
alleged commitment to maintain the Bank’s capital was therefore made to the appropriate
“Federal depository institutions regulatory agency” for purposes of 11 U.S.C. § 507(a)(9).
The Trustee’s argument that the petition date is the proper time frame to determine what
agency is the appropriate “federal depository regulatory agency” is unavailing. Because the
alleged commitment to maintain the Bank’s capital is based on Bancorp’s Board Resolution,
which references the July 2, 2009 Written Agreement, and the Capital Restoration Plan, the
applicable time period for examining the alleged commitment for purposes of § 507(a)(9) is
when the commitment was made, not the petition date, which occurred several months later.
3) 	Whether the Commitment to Maintain the Capital of the Bank Terminated
Upon the Appointment of FDIC-R
The Trustee contends that any alleged commitment to maintain the capital of the Bank
terminated upon the appointment of FDIC as receiver for the Bank. She reasons that Bancorp
lost its control over the Bank upon the appointment of FDIC-R and therefore could no longer
attempt to raise capital for the Bank. Because the Bank was closed before the date Bancorp filed
its voluntary Chapter 7 petition, and because rights and obligations are generally established as
of the petition date, the Trustee concludes that any alleged commitment by Bancorp to maintain
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the capital of the Bank terminated pre-petition. Again, this Court disagrees. As the Fourth
Circuit pointed out in Firstcorp, even if the receivership arguably terminates the bank holding
company’s control over its subsidiary bank, that termination operates
only to absolve [the bank holding company] of any obligation to continue maintaining
[the subsidiary bank’s] capital and thereby clear[s] it of any liability arising from further
deterioration of [the subsidiary bank’s] capital . . . . Termination in no way absolved [the
bank holding company] of the existing, matured liability . . .
Firstcorp, 973 F.2d at 251 (emphasis in original).
Thus the fact that Bancorp could no longer attempt to raise capital for the Bank after FDIC-R’s
appointment and the Bank’s closure does not mean that any existing liability based on the
commitment to maintain the capital of the Bank was extinguished. Rather, the amount of the
alleged commitment could not be increased after January 28, 2011, the date the Bank was closed
and FDIC-R was appointed receiver.5 Cf. Franklin, 303 B.R. at 500 (agreeing with Firstcorp,
and finding that the OTS held a valid claim based on a capital commitment for any matured
deficiency that existed as of the date of the appointment of RTC as conservator).6 The Court will
grant the Motion to Dismiss Count I with respect to the Trustee’s argument that FDIC-R’s claim
must be disallowed because Bancorp’s commitment terminated pre-petition.
4) 	Whether FDIC-R has Standing to Enforce the Commitment to Maintain the Capital of
the Bank
As determined above, the commitment to maintain the capital of the Bank was made to
the Board of Governors, and not to the FDIC-R. The Trustee, therefore, questions FDIC-R’s
standing to enforce the alleged commitment to maintain the capital of the Bank. In response,
FDIC-R contends that it has standing to enforce the alleged commitment on three grounds: a) as
5FDIC-R fixed the amount of its claim as of September 30, 2010, the date of the November 10-Q. See Claim No. 9-
2.
6Because no capital deficiency existed as of that date, the Franklin court concluded that OTS did not have a valid
capital deficiency claim against the bankruptcy estate. Franklin, 303 B.R. at 501.
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successor to the Board of Governors; b) as successor to the Bank; and c) as the intended third-
party beneficiary of the alleged commitment. Section 1831aa(a) of Title 12 provides:
(a) In general
Notwithstanding clause (i) or (ii) of section 1818(b)(6)(A) of this title or section
1831o(e)(2)(E)(i) of this title, the appropriate Federal banking agency for a depository
institution may enforce, under section 1818 of this title, the terms of--
(1) any condition imposed in writing by the agency on the depository institution
or an institution-affiliated party in connection with any action on any application,
notice, or other request concerning the depository institution; or
(2) any written agreement entered into between the agency and the depository
institution or an institution-affiliated party.
12 U.S.C. § 1831aa(a).
Section 1831aa(b) of Title 12 provides:
After the appointment of the Corporation as the receiver or conservator for a depository
institution, the Corporation may enforce any condition or agreement described in
paragraph (1) or (2) of subsection (a) imposed on or entered into with such institution or
institution-affiliated party through an action brought in an appropriate United States
district court.
12 U.S.C. § 1831aa(b).
FDIC-R relies on 12 U.S.C. § 1831aa(b) to demonstrate that FDIC-R, as successor to the Board
of Governors, has standing to enforce the commitment to maintain the capital of the Bank. The
Trustee observes that this provision gives the “Corporation,” not the receiver, the right to enforce
the referenced agreements after appointment of a receiver. The “Corporation” is defined earlier
in Title 12 as the Federal Deposit Insurance Corporation. See 12 U.S.C. § 1811(a)(“There is
hereby established a Federal Deposit Insurance Corporation (hereinafter referred to as
‘Corporation’) . . . ”). The language of 12 U.S.C. § 1831aa(b) could thus be interpreted to
require enforcement by the Federal Deposit Insurance Corporation in its corporate capacity,
rather than in its capacity as receiver. 12 U.S.C. § 1831aa(b)(“the Corporation may enforce . . .
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”). On the other hand, subsection (a) generally provides that “the appropriate Federal banking
agency . . . may enforce . . . the terms of . . . any written agreement entered into between the
agency and the depository institution or an institution-affiliated party.” 12 U.S.C. § 1831aa(a).
Subsection (b) then sets forth what is to happen after the appointment of the “Corporation” as
conservator or receiver. 12 U.S.C. § 1831aa(b). Given this context, the language of subsection
(b) could also be interpreted to mean that “[a]fter appointment of the Corporation as the receiver
. . . the Corporation [as receiver] may enforce any condition or agreement . . . .” The Court
believes this is the most natural reading of the section. This reading is also supported by the
legislative history.
When the language of a statute is capable of two different, but reasonable interpretations,
an ambiguity exists. See In re Geneva Steel Co., 281 F.3d 1173, 1178 (10 th Cir. 2002)(“An
‘[a]mbiguity exists when a statute is capable of being understood by reasonably well-informed
persons in two or more different senses.’”)(quoting 2A Norman J. Singer, Statutes and Statutory
Construction, § 45.02 at 11-12 (6th ed. 2000)). The Court may look to legislative history as an
aid to interpret an ambiguous statute. See Geneva Steel, 281 F.3d at1178 (“If a statute is
ambiguous, a court may seek guidance from Congress’ intent, a task aided by reviewing the
legislative history.”)(citing United States v. Simmonds, 111 F.3d 737, 742 (10 th Cir. 1997)).
The legislative history evidences Congressional intent to allow the FDIC-R to enforce
under this section any written agreement entered into between an appropriate Federal banking
agency and an institution-affiliated party. The Senate Report relating to this subsection provides:
“this section clarifies existing FDIC authority as receiver or conservator to enforce written
conditions or agreements.” S.Rep. 109-256, 109th Cong., 2nd Sess. 2006, reprinted in 2006
U.S.C.C.A.N. 1219, 1226. In light of this indication of Congressional intent, the Court finds that
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FDIC-R has sufficient standing to assert a claim based on Bancorp’s commitment to maintain the
capital of the Bank. This interpretation is not inconsistent with Tenth Circuit authority.
Overland Park expressly did not consider whether the Resolution Trust Corporation or
the Federal Deposit Insurance Corporation, as receiver, had standing to file and pursue a proof of
claim based on a capital commitment, but concluded that the Office of Thrift Supervision, which
succeeded to the two agencies involved in the stipulation constituting the commitment to
maintain capital, could pursue the claim. See Overland Park, 236 F.3d at 1254 (finding that
“Thrift Supervision is entitled, if not obligated to pursue its capital maintenance claim” since it
succeeded to the two agencies involved with the stipulation, and noting that, because neither
RTC nor FDIC was a party to the litigation, the court would not address their standing as
receiver to pursue the claim). In the same vein, FDIC-R succeeded to the Board of Governors,
the appropriate Federal depository institutions regulatory agency to which Bancorp’s capital
commitment was made, for purposes of enforcing the commitment.
Having determined that FDIC-R has standing to enforce the capital maintenance guaranty
based on its succession to the interests of the Board of Governors, the Court need not address the
FDIC-R’s remaining arguments with respect to its standing to assert its claim. The Trustee
cannot avoid her obligation under the capital maintenance guaranty based on a lack of standing.
5) 	Whether FDIC-R Timely filed its Proof of Claim
The last date for filing proofs of claim in a Chapter 7 case generally is ninety days after
the first date set for the meeting of creditors. See Fed.R.Bankr.P. 3002(c)(“In a chapter 7
liquidation, . . . a proof of claim is timely filed if it is filed not later than 90 days after the first
date set for the meeting of creditors called under § 341(a) of the Code”). An exception to the 90-
day claims bar date exists with respect to claims filed by “governmental units.” See
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Fed.R.Bankr.P. 3002(c)(1). For governmental units, the claims bar date in a Chapter 7 case is
180 days after the date of the order for relief. See Fed.R.Bankr.P. 3002(c)(1)(“A proof of claim
filed by a governmental unit . . . is timely filed if it is filed not later than 180 days after the date
of the order for relief.”). The date of the order for relief in a Chapter 7 case is the petition date.
See 11 U.S.C. § 301(b)(“The commencement of a voluntary case under a chapter of this title
constitutes an order for relief under such chapter.”). Bancorp filed a voluntary petition under
Chapter 7 of the Bankruptcy Code on April 27, 2011. The 180th day following the order for
relief was October 24, 2011. FDIC-R filed its proof of claim on that date.
The Trustee reasons that, because FDIC-R succeeds to the rights of the Bank,7 its rights
are necessarily limited to the rights of the Bank such that FDIC-R was required to file its claim
by the general claims bar date applicable to creditors that are not governmental units. The
Trustee also contends that FDIC-R is not a “governmental unit.” Again, this Court disagrees.
“Governmental unit” as defined by the Bankruptcy Code includes departments, agencies,
or instrumentalities of the United States. See 11 U.S.C. § 101(27)(“The term ‘governmental
unit’ means . . . department, agency, or instrumentality of the United States . . .”). Congress
intended for this definition to be interpreted broadly. See T I Fed. Credit Union v. DelBonis, 72
F.3d 921, 930-931 (1st Cir. 1995)(“Legislative history suggests that Congress intended to
‘defin[e] ‘government unit’ in the broadest sense.’”)(quoting H.Rep. No. 95-595, 95 th Cong. 1 st
Sess. 311 (1977)(U.S.C.C.A.N. 1978, pp. 5759, 5963, 6268). The Federal Deposit Insurance
Corporation is an agency of the United States falling within the Bankruptcy Code’s definition of
“governmental unit.” See, Fed. Deposit Ins. Corp. v. Wright (In re Wright), 87 B.R. 1011, 1015
(Bankr.D.S.D. 1988)(stating that “the FDIC is a governmental unit” and pointing out that “[t]he
7See 12 U.S.C. § 1821(d)(2)(A)(i)(“The Corporation shall, as conservator or receiver, and by operation of law,
succeed to . . . all rights, titles, powers and privileges of the insured depository institution . . . ”).
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FDIC has been held to be an agency of the United States for purposes of Title 28 of the United
States Code and the Federal Rules of Civil Procedure, as well as the Federal Tort Claims
Act.”)(citations omitted). But is the FDIC in its capacity as receiver nevertheless an agency or
instrumentality of the United States, and, consequently a “governmental unit”?
The Trustee points out that there is a distinction between the FDIC as “Corporation” and
FDIC when acting as receiver. See, Fed. Deposit Ins. Corp. v. Roldan Fonseca, 795 F.2d 1102,
1109 (1st Cir. 1986)(“‘Corporate’ FDIC and ‘Receiver’ FDIC are separate and distinct legal
entities.”)(citing Jones v. Fed. Deposit Ins. Corp., 748 F.2d 1400, 1402 (10 th Cir.
1984)(remaining citation omitted)). See also, In re Butcher, 32 B.R. 572, 575-576
(Bankr.E.D.Tenn. 1983)(FDIC is one entity when acting in its corporate capacity and a second
entity when acting as receiver of a bank). Some of the cases the Trustee cites conclude that the
FDIC, when acting as receiver, is not an agency of the United States. See, e.g., Perpetual Fin.
Corp. v. United States, 61 Fed.Cl. 126, 145 (Fed.Cl. 2004)(observing that, “[w]hen acting in its
receivership capacity, the FDIC is not an agency of the United States.”)(citation omitted); Shock
v. Fed. Deposit Ins. Corp., 118 F.Supp.2d 165, 169– 170 (D.R.I. 2000), aff’d sub nom. Shock v.
United States, 254 F.3d 1 (1st Cir. 2001)(concluding that the FDIC in its capacity as receiver is
not a federal agency for purposes of the Equal Access to Justice Act, reasoning that the FDIC, as
receiver, “does not act on behalf of the United States government, and it does not perform any
function unique to the federal government.”). However, the Court has found no case
determining whether FDIC-R is a governmental unit for purposes of timely filing a proof of
claim in a bankruptcy case, nor has either party cited a case for this proposition to the Court.
Whether an entity constitutes a governmental unit or federal instrumentality depends on
“‘whether it performs an important government function.’” DelBonis, 72 F.3d at 931 (quoting
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United States v. Michigan, 851 F.2d 803, 806 (6th Cir. 1988)). In Marshack v. Tapager (In re
Motivation Resources, Inc.), 158 B.R. 184 (Bankr.C.D.Cal. 1993) the bankruptcy court had little
trouble concluding that the FDIC, as receiver, is a governmental unit for purposes of waiving
sovereign immunity under 11 U.S.C. § 106. The Motivation Resources court acknowledged that
“the FDIC operates in two separate and distinct legal capacities as corporate insurer of accounts
and as receiver for failed financial institutions,” but pointed out that, “[w]hen the FDIC is
functioning in its capacity as receiver, it acts as an instrument of the federal government,
providing security for financial transactions in this country.” Motivation Resources, 158 B.R. at
186 an 187 (citations omitted). Ultimately the Motivation Resources court found that “[t]he
FDIC, in either of its capacities, is at the very least an instrumentality of the federal
government.” Id. at 187.8
In addition, the Court notes that 12 U.S.C. § 1819(b)(1) of FIRREA provides that “[t]he
Corporation, in any capacity, shall be an agency of the United States for purposes of section
1345 of Title 28, without regard to whether the Corporation commenced the action.” 12 U.S.C.
§ 1819(b)(1)(emphasis added). Even though the agency authority established under this section
is tied to a jurisdictional provision found in Title 28, not Title 11’s Bankruptcy Code, this section
lends further support to the Court’s conclusion that the FDIC-R is a governmental unit for
purposes of Fed.R.Bankr.P. 3002(c)(1). The FDIC-R timely filed its proof of claim by the
claims bar date applicable to governmental units. The Motion to Dismiss Count I will be granted
8Cf. United States v. Sweeney, 226 F.3d 43, 45 (1 st Cir. 2000)(observing that, by enacting FIRREA, “Congress made
pellucid that, in acting as receiver of failed banks, the FDIC fosters important public policies relating to the
avoidance of a national banking crisis.”)(citation omitted). But cf. Shock, 118 F.Supp.2d at 169-170 (observing that
“[a]s receiver, the FDIC does not act on behalf of the United States government, and it does not perform any
function unique to the federal government. Instead, it acts on behalf of the failed bank in the interest of that bank’s
creditors.”). Shock relied on a First Circuit decision which held “that the FDIC, acting as receiver, does not qualify
as a federal instrumentality for purposes of the Tax Injunction Act” to conclude that the FDIC, as receiver, is not an
agency of the United States for purposes of the Equal Access to Justice Act. Shock, 118 F.Supp.2d at 170 (citing
Bank of New England Old Colony v. Clark, 986 F.2d 600, 603 (1 st Cir. 1993)).
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with respect to the Trustee’s claim that FDIC-R’s proof of claim must be denied because it was
not timely filed.
CONCLUSION
Based on the foregoing, the Court will grant the Motion to Dismiss Count I, in part. The
following grounds raised by the Trustee in her Complaint fail as a matter of law: 1) the
commitment to maintain the capital was not made to a “Federal depository institutions regulatory
agency” for purposes of 11 U.S.C. § 507(a)(9); 2) Bancorp’s obligations under the commitment
to maintain the capital of the Bank terminated pre-petition; 3) FDIC-R lacks standing to assert a
claim based on Bancorp’s commitment to maintain the capital of the Bank; and 4) FDIC-R’s
proof of claim was untimely. With respect to the Trustee’s argument that Bancorp did not make
a commitment to maintain the capital of the Bank, the Court concludes that the language in the
Board Resolution, the July 2, 2009 Written Agreement, and the Capital Restoration Plan
establishes that Bancorp did make a commitment to maintain the capital of the Bank for purposes
of asserting a priority claim under 11 U.S.C. § 507(a)(9). However, Count I of the Complaint
also sufficiently sets forth a defense to FDIC-R’s claim. The Court will not, therefore, dismiss
Count I of the Complaint in full. A separate order consistent with this Memorandum Opinion
will be entered.
______________________________
ROBERT H. JACOBVITZ
United States Bankruptcy Judge
Date entered on docket: July 3, 2014
Case 13-01033-j Doc 38 Filed 07/03/14 Entered 07/03/14 13:40:56 Page 28 of 29

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COPY TO:
Corali Lopez-Castro
Kozyak Tropin & Throckmorton PA
Attorney for Plaintiff
2525 Ponce De Leon 9th Floor
Miami, FL 33134
David Aaron Samole
Kozyak Tropin & Throckmorton PA
Attorney for Plaintiff
2525 Ponce De Leon 9th Floor
Miami, FL 33134
Paul Thomas Musser
Katten Muchin Rosenman LLP
Attorney for Defendant
525 W. Monroe St., Suite 1900
Chicago, IL 60661-3693
Jeffrey A. Sandell
Federal Deposit Insurance Corporation
1601 Bryan St, 15th Floor
Dallas, TX 75201
Joshua David Wayser
Katten Muchin Roseman LLP
Attorney for Defendant
2029 Century Park East, Ste 2600
Los Angeles, CA 90067
Case 13-01033-j Doc 38 Filed 07/03/14 Entered 07/03/14 13:40:56 Page 29 of 29