Introduction

Recently, there have been cases in several states presenting the issue whether funds in an “inherited IRA” are exempt assets.1 An Ohio Bankruptcy Court has now ruled in favor of granting exempt status.

Introduction

On September 30th, the Sixth Circuit affirmed the dismissal of the bankruptcy trustee's lawsuit against Deloitte & Touche, the debtor's former auditor. The trustee alleged that Deloitte negligently failed to uncover and report unsound related-party transactions by the debtor's sole shareholder and CEO, and aided and abetted the CEO's breach of his fiduciary duty to the debtor. Affirming dismissal, the Court held the trustee failed to allege reliance upon Deloitte's audits and the statute of limitations bars the aiding and abetting claim.

On Friday, the Florida Office of Financial Regulation closed Wakulla Bank, headquartered in Crawfordville, Florida, and appointed the FDIC as receiver. As receiver, the FDIC entered into a purchase and assumption agreement with Centennial Bank, headquartered in Conway, Arkansas, to assume all of the deposits of the failed bank.

On Friday, the Washington Department of Financial Institutions closed Shoreline Bank, headquartered in Shoreline, Washington, and appointed the FDIC as receiver. As receiver, the FDIC entered into a purchase and assumption agreement with GBC International Bank, headquartered in Los Angeles, California, to assume all of the deposits of the failed bank.

Yesterday, following announcements from Ally Financial and JP Morgan Chase of temporary suspensions of foreclosure efforts in certain states, Fannie Mae issued a statement yes

1. Do your best; work as hard as you can.

2. Fighting with the regulators is, at best, useless and, at worst, damaging to the institution. If the bank is going to fail, don’t blame the regulators.

3. Search hard for solutions. Short of buying out the bad loans with personal funds, be as aggressive as reasonably practicable. Prove to the regulators you know what is at stake: the insured deposits.

4. Cooperate with the bidders in any assisted transaction.

There are a number of ways directors and officers can get ready personally for potential FDIC litigation.

1. Take steps to understand the bank’s D&O insurance policies before the bank is closed. Determine whether policy coverage is offset by the fees for defense of claims. If so, understand the FDIC wants recovery, not protracted litigation.

The Sixth Circuit continues to liberally define the "actual knowledge" required to trigger the 3-year ERISA statute of limitations and, in doing so, affirmed summary judgment in favor of the defendants in Brown v Owens Corning Investment Review (Case No. 09-3692).