JUDGE DENIES FDIC VOTE ON MCORP CHAPTER 11 PLAN
JUDGE DENIES FDIC VOTE ON MCORP CHAPTER 11 PLAN DALLAS, Nov. 12 /PRNewswire/ -- MCorp and its two subsidiaries,
MCorp Financial, Inc. and MCorp Management, debtors in Chapter 11 cases, stated today that District Judge Lynn N. Hughes of the U.S. District Court for the Southern District of Texas announced decisions denying the FDIC any vote in any of the three Chapter 11 cases. The three Chapter 11 plans are set for confirmation hearing on Nov. 13, 1991, before bankruptcy Judge Letitia Z. Clark of the Southern District of Texas.
District Judge Hughes ruled that, for voting purposes, the FDIC had total claims against MCorp Management of approximately $1.8 million and against MCorp for approximately $400,000. At the same time, however, Judge Hughes announced a decision against the FDIC on the counterclaims for federal taxes in the amount of $4.8 million in favor of MCorp and $9.7 million in favor of MCorp Management. Judge Hughes also estimated other counterclaims against the FDIC, for voting purposes, in amounts exceeding $23 million in favor of MCorp and $35 million in favor of MCorp Management. As a result, the FDIC's potential claims were completely offset for voting purposes. Judge Hughes did not take into consideration the litigation in MCorp vs. Clarke pending in the U.S. District Court for the Northern District of Texas, which may result in additional recoveries by MCorp, MCorp Management, and MCorp Financial. In September of 1989, the FDIC filed proofs of claims against the debtors' estates totalling approximately $847 million. The FDIC voluntarily reduced these claims in January 1991 to approximately $281 million. From the outset, MCorp and its subsidiaries have denied any liability to the FDIC and alleged substantial offsets and counterclaims. "Judge Hughes' decisions today and the FDIC's inability to establish their claims despite 2-1/2 years of litigation since the Chapter 11 cases of MCorp and its subsidiaries began bears out our long-held belief that the debtors' estates are not liable to the FDIC," said Peter B. Bartholow, president and chief executive officer of MCorp. Jurisdiction over the FDIC's claims has been in Judge Hughes' court since the fall of 1990, when the debtors' motion to withdraw the reference with respect to such claims was granted. There have been extensive motions, hearings and discovery heard or supervised by Judge Hughes. It is expected that the FDIC will appeal Judge Hughes' decisions. The debtors' counterclaims against the FDIC, other than the tax counterclaim decided by Judge Hughes today, have not yet been fully resolved for purposes other than voting on the Chapter 11 plans. MCorp, MCorp Management and MCorp Financial, Inc., filed Chapter 11 petitions on March 31, 1989, in the United States Bankruptcy Court for the Southern District of Texas, Houston Division. MCorp (Pacific Stock Exchange: MP) is a Texas-based financial services company. FDIC CLAIMS AGAINST MCORP FDIC CLAIMS & NET RECOVERIES Claims Original at Net Recovery Claims Claims Trial Date to FDIC Against MCorp Financial: Credit Card Sales 57,531 -- -- Trust Unit Sales 55,741 60,000 -- Excess Dividends 155,146 8,280 -- Subtotal $268,417 $ 68,280 $ 0 Against MCorp: Excess EDP Fees 71,000 100,000 -- Employee Benefits 51,400 7,700 -- Medium Term Notes 2,085 -- -- Asset Purchase Agreement unknown 1,300 Continental Building Lease Payments 420 590 400 Contingent Claims 36,000 -- -- Subtotal $160,906 $109,590 $ 400 Against MCorp Management: Income Tax $316,538 8,000 -- Credit Card Sales 75,589 55,000 -- Insurance Premium Refunds 1,517 1,500 997 Capital Notes Purchase Agreements 12,000 12,000 -- CREA Purchase Agreements 11,223 7,200 -- Intercompany Receivables 812 800 804 Subtotals $417,679 $ 84,500 $ 1,801 TOTAL $847,002 $262,370 $ 2,201 MCorp Counterclaims against FDIC -- -- $73,523 MCorp Net Claims against FDIC -- -- $71,322 -0- 11/12/91 /CONTACT: Kenneth V. Shaver of MCorp, 713-546-5000, ext. 2506, or Steven M. Zager, 713-546-5035, for MCorp/ CO: MCorp ST: Texas IN: FIN SU: JT -- NY099 -- 3700 11/12/91 19:05 EST
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|Date:||Nov 12, 1991|
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