BuckleySandler’s Troubled Bank practice advises clients on the myriad issues that banks as well as their holding companies, directors, and officers face when a bank experiences threats to its continued operation. We have extensive experience counseling such clients on the full range of complex regulatory, transactional, litigation, and personal liability issues that they may confront. BuckleySandler also works closely with investor clients to identify, negotiate, and close on investment opportunities with troubled financial institutions and their regulators.
Litigation, Enforcement, and Compliance with Administrative Actions
BuckleySandler represents banks and other financial institutions and their directors and officers in litigation and enforcement matters related to troubled banks. Our attorneys have defended and advocated for clients on matters involving the FDIC, the OCC, the Federal Reserve, the SEC, the U.S. Department of Justice, and other regulatory and enforcement authorities.
Our experience in the troubled bank context includes the following:
- Disputes with the FDIC and other agencies over the ownership of certain assets, including, among others, tax refunds
- Assistance in a bank's efforts to comply with administrative actions
- Litigation of enforcement actions initiated by federal banking agency in administrative courts
- Disputes over the findings in reports of examination
- Negotiation of the form and content of an administrative action against a bank or its institution-affiliated parties
- Analysis of D&O and E&O insurance policy issues and making claims
- Lawsuits concerning corporate fiduciary duties and corporate waste
- Lawsuits concerning accounting fraud
- Defense of institutions and their officers and directors in grand jury investigations
- Defense of institutions and their officers and directors in SEC enforcement proceedings
- Defense of institutions and their officers and directors in class actions, individual and derivative lawsuits brought by shareholders and other private parties
- Lawsuits to remove the FDIC as receiver of the bank
The need for a bank or its holding company to conduct a special, internal investigation arises in both troubled and healthy bank contexts. However, troubled banks can be more susceptible to the need for a special investigation given the increased risk of bank regulatory actions, shareholder derivative suits, and SEC and Department of Justice investigations.
BuckleySandler's experience in special, internal investigations includes:
- Conducting investigations into improprieties of senior and other bank officers
- Conducting investigations into matters required by a banking agency in the context of an enforcement action for review by the board of directors and/or its audit committee
- Conducting investigations into compliance with consumer laws and regulations
- Conducting investigations into compliance with securities laws and regulations
- Conducting investigations to ensure compliance with AML/Bank Secrecy Act standards
BuckleySandler represents Chapter 7 trustees of insolvent bank and thrift holding companies in fulfilling their responsibilities to creditors seeking to recover their interests through the Chapter 7 process. We provide trustees with legal advice as special counsel, including:
- Conducting or assisting investigations concerning the financial affairs of the debtor holding company and the failure of its underlying bank or thrift
- Assessing and litigating claims against insiders and third party advisors of the debtor holding company
- Assisting or conducting investigations and litigation of avoidable transfers
- Defending or assisting the defense of government enforcement and civil actions naming or otherwise involving the debtor holding company
BuckleySandler, as special counsel, also handles similar matters for debtors in Chapter 11 proceedings.
Corporate and Transactions
BuckleySandler advises troubled financial institutions and their holding companies on a wide variety of transactions and strategies which, if successful, can help the institution increase capital levels, maintain compliance with capital maintenance requirements, avoid or delay the imposition of regulatory enforcement actions and receivership for the institution, including:
- Through public or private offerings
- Issuance of debt or equity securities
- Mergers and whole institution sales
- Asset and branch sales
- Conversion or reduction of outstanding debt instruments or trust preferred securities
- Section 363 sale transactions
BuckleySandler also represents prospective investors in troubled institutions, including:
- Management groups unable to obtain de novo charters
- Bank bidder on the deposits and assets of failed banks
- Private equity acquisitions of troubled banks
BuckleySandler’s corporate and transactional practice is characterized by not only proficiency on the transactional analysis and documentation, but also a deep understanding of the regulatory requirements and hurdles applicable to the transaction.
Directors and Officers
BuckleySandler counsels bank directors, bank boards, and bank officers on how to establish a decision-making process that will minimize personal liability, and defends them against enforcement and civil actions threatened or filed by banking agencies and other governmental authorities. The firm also advises bank boards and management on how to protect themselves against personal liability through D&O insurance policies, charter and bylaw indemnification provisions, and individual indemnification agreements with individual directors.
If a bank is facing risk of closure, BuckleySandler conducts a thorough review of facts and circumstances that might place directors and officers at risk and counsels them as to how to minimize that risk and prepare for potential litigation or enforcement action.
When a bank is closed, BuckleySandler helps directors and senior officers respond to demand letters from the FDIC, prepares individuals for depositions, advances arguments to the FDIC as to why civil or enforcement action is not warranted, sues to challenge the seizure, and if a suit or enforcement action is initiated by the FDIC, defends the client or negotiates a settlement.
BuckleySandler has represented a number of bank directors and officers in a variety of enforcement and civil action matters. Representative experience includes:
- Suit on behalf of United Western Bank and its holding company, officers, and directors, challenging the closing of United Western Bank by the OTS and FDIC
- Defense of directors of failed banks against threatened civil suits and enforcement actions by the FDIC
- Preparation of defense of directors of various troubled banks prior to bank failure
- Amicus brief for the American Association of Bank Directors supporting the right of directors of failed banks to have access and copies of bank records to defend themselves
Members of the Firm’s Troubled Bank practice group include former bank regulators, experienced civil and criminal litigators, and the Executive Director of the American Association of Bank Directors, a nonprofit trade association representing the interests of bank and savings institution directors.