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Monday, November 9, 2009
Advanta bankrupt; FDIC may take bank

Credit card lender Advanta Corp. of Spring House on Sunday filed a voluntary petition for reorganization under Chapter 11 of the US bankruptcy code. The case was filed a federal bankruptcy court in Wilmington, DE: 09-13931, before Judge Kevin Carey.

Advanta said in this statement it has "close to $100 million in cash" on hand, which "over time will not be enough" to pay all it owes, which includes "$138 million of senior retail investment notes outstanding." Bankruptcy "will, among other things, maximize recoveries of the senior retail note holders." Which doesn't mean they'll get all they're owed.

Banks don't go bankrupt - they get taken over by the Federal Deposit Insurance Corp. Advanta's bank unit, Advanta Bank Corp, with $2.7 billion in old loans from 360,000, isn't part of the bankruptcy filing. Instead, it faces a possible FDIC takeover: The company failed to get final FDIC approval for two reorganization plans earlier this year, doesn't have enough capital to meet federal guidelines, and "may be turned over to an FDIC receivership." 

Advanta formerly employed over 1,000 at sites in Pennsylvania, Delaware, New Jersey, California and other states, but shrank to under 200 earlier this year as loan losses mounted and it stopped making new loans. More than 100 U.S. banks have failed so far this year.

For more information, Advanta has set up a toll-free number: 1-800-223-7074 and Web site: www.advantareorg.com.

Advanta President Bill Rosoff tells what went wrong in a court filing here; Advanta lists its debtors, including lender trustee Bank of New York Mellon Corp., plus local and national vendors (including a jet service) of which the largest are owed hundreds of thousands, in its bankruptcy petition here. 

 

Posted by Joseph N. DiStefano @ 10:16 AM  Permalink | 7 comments
Comments   
Posted 10:04 AM, 11/09/2009
hexyscores
That's funny! The FDIC is bankrupt too! The taxpayers take will take another bath!
Posted 10:12 AM, 11/09/2009
distefj
The FDIC has piles of money. They're asking the banks for more, tho Reagan's ex-FDIC chief, Bill Isaac, has said (in my column, among other places) that FDIC doesn't really need more. Might have been different if they'd let Citi, Wachovia, etc. fail sted of propping them up.
Posted 10:41 AM, 11/09/2009
LOTTABALONEY
What do I care if they go bankrupt? My biggest investment lately was to by a used refrigerator dolly complete with heavy duty strap. I'm going to use it to move currency around, the same way they did it in Germany and in China when the governments were at war and the economy had collapsed. You needed a dolly or hand truck to move about the smallest amount of money due to inflation and the continous printing of paper money. All worthless! Take a look at gold. Its about 1100 an ounce-- I bought gold in Malaysia at $231 an ounce. My problem was that I did not buy a lot more and sell it bit by bit for the monopoly money these days. If anything will bring America to its knees it will be a collapse of the economy from within. Years of spending, years of indulging Tyler and Ashleigh with their every whim, years of buying junk and exporting jobs. There was a time when Pennsylvania was a manufacturing state and goods were made for use at home. Made in Philadelphia was a mark of quality and good substance. Today everthing is made in China and we are supporting a double economy. On the other hand, perhaps the Chinese are not so bad after all. We are failing in our quest for democracy, same sex marriage, equal rights and coddling of criminals, unsafe streets, shootings galore. Perhaps we should contract both our court system and the prison system to the Chinese government and see if they can do a better job. We outsource so much that the only job requirement these days is to be able to pronounce correctly, "You want fries wit dat?" Take a good look at your politicians. Don't support them just because they are Polish or Black or any ethnic group solely. There are fine people who cannot be elected but on their own their lives are succesful and prosperous. We have people in Washington who have been show men and women, loud mouths and characters. This seems to be their only qualification. Take a good look at Philadelphia's government then let me know your opinion.
Posted 11:26 AM, 11/09/2009
distefj
Lotta, if you're right about the dollar, you might not have to worry about manufacturing going away anymore, cause as the dollar gets weaker more factories are gonna find it attractive to move back to the U.S. Maybe even some from China, where the legal system is notoriously unhelpful, if you happen to be an independent capitalist or an investor.
Posted 12:34 PM, 11/09/2009
kingnutter
The FDIC has piles of money printed out of thin air by the Fed, and what does it cover - a couple of percent of all deposits nationwide? All the FDIC does is create moral hazard.
Posted 01:44 PM, 11/09/2009
distefj
So, Monopoly money to pay Monopoly losses?
Posted 06:16 PM, 11/09/2009
MikeP
And who exactly are these manufacturers going to sell their goods to? The disappearing american middle-class consumer? The FDIC isn't bankrupt but we had to bailout a bunch of banks because they were too big to fail? Sure, if we give the banks trillions and they don't get taken over by the FDIC, the FDIC has sufficient funds. Wacky. Not that FDIC funding could or should have ever saved the day anyway.
7 comments
About Joseph N. DiStefano
Joseph N. DiStefano writes this blog to feed his PhillyDeals column, which is printed in the business pages of The Philadelphia Inquirer every Sunday, Tuesday, Wednesday, Thursday and Friday. Joe has worked at the Inquirer, mostly, since 1988. He has also written for Bloomberg and Gannett, authored the book Comcasted, majored in economics at Penn, and fathered six children. Reach Joe at 215-854-5194 and JoeD@phillynews.com

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