The FDIC announced today that it has reached an
agreement in principle with the Chapter Seven bankruptcy trustee
of Southeast Banking Corporation. The agreement, subject to
approval by the FDIC's Board of Directors and the courts, will
completely settle all pending litigation between Southeast Banking
Corporation and the FDIC. The litigation relates to the 1991
failure of the former Southeast Bank, N.A., Miami, FL, and the
FDIC's subsequent administration of the receivership estate.
"I am pleased that the FDIC has been successful in reaching
a resolution to litigation involving the failure of a major bank that
does not require expenditures from the Bank Insurance Fund," said
FDIC Chairman Andrew C. Hove, Jr. "We are gratified to be able
to pass the equity in the Southeast receivership to the bankruptcy
trustee without continuing this lengthy and expensive litigation."
Under the terms of the agreement, the FDIC will retain
$221.4 million in contested interest dividends from the estate of
the failed bank. In addition, the trustee will release all other claims
against the FDIC and other government entities. The agreement
will not require any expenditures from the Bank Insurance Fund or
any other public funds.
The FDIC expects that, after all allowed claims are paid,
substantial value will remain in the estate. Consistent with
standard FDIC practice, the value remaining in the estate after
creditor claims (principal and interest) have been paid will revert to
Southeast Banking Corporation. Under the settlement, the transfer
of the residual value to the trustee or his designee will be in
accordance with Section 197 of the National Bank Act.
Southeast Bank, with total assets of $10.2 billion, was
closed September 19, 1991, by the Office of the Comptroller of the
Currency and the FDIC was named receiver.
Congress created the Federal Deposit Insurance Corporation in 1933 to
restore public confidence in the nation's banking system. The FDIC insures
deposits at the nation's 11,337 banks and savings associations and it
promotes the safety and soundness of these institutions by identifying,
monitoring and addressing risks to which they are exposed.
FDIC press releases and other information are available on the Internet via
the World Wide Web at www.fdic.gov and
may also be obtained through the
FDIC's Public Information Center (800-276-2003 or (703) 562-2200).
