Irwin Financial files Chapter 7 bankruptcy after bank closures

By Caroline Salls

Pittsburgh, Sept. 21 - Irwin Financial Corp. filed Chapter 7 bankruptcy on Friday in the U.S. Bankruptcy Court for the Southern District of Indiana after the Indiana Department of Financial Institutions closed its state-chartered bank subsidiary Irwin Union Bank and Trust Co. and the Office of Thrift Supervision closed Irwin Union Bank, FSB.

The Federal Deposit Insurance Corp. has been appointed as receiver for Irwin Union Bank and Trust and Irwin Union Bank, according to an 8-K filed with the Securities and Exchange Commission.

After the banks were closed, First Financial Bank, NA assumed all of their deposits and essentially all of their assets in a transaction facilitated by the FDIC.

Irwin Financial said in the 8-K that its principal assets are the capital stock of the banks, and the company does not expect to receive any recovery after the receivership and conservatorship processes are completed.

The company said its board of directors has been reduced to one director, with William I. Miller serving as the sole director.

In addition, Matthew F. Souza has been appointed as Irwin Financial's chief administrative officer, Gregory F. Ehlinger has been appointed as its chief financial officer and Steven R. Schultz and Jody Littrell have been appointed vice presidents.

Defaults

According to the 8-K, the bankruptcy filing triggered an event of default on the company's $234 million of junior subordinated debentures.

Specifically, Irwin Financial said the default could affect its $30 million principal amount of 7.58% subordinated notes due 2014; its $35.6 million principal amount of 8.7% junior subordinated debentures due 2032; its $51.5 million principal amount of junior subordinated deferrable interest debentures due 2033; its $53.4 million principal amount of junior subordinated debt securities due 2035; its $32.5 million principal amount of junior subordinated notes due 2036; its $15.5 million principal amount of junior subordinated debt securities due Dec. 15, 2036, which were declared immediately due and payable; and its $15.5 million principal amount of floating-rate junior subordinated debt securities due 2037.

NYSE notice

Also, Irwin Financial said it has received a notice from the New York Stock Exchange that the company has fallen below the NYSE's continued listing standard that requires it to have an average closing price of not less than $1.00 over a consecutive 30-day trading period.

The exchange gave Irwin Financial six months to bring its share price and average share price back above $1.00.

The NYSE has also halted trading in the company's common and trust preferred stock for a continued listing evaluation.

According to court documents, Irwin Financial has $10 million to $50 million in assets and $100 million to $500 million in debt.

Columbus, Ind.-based Irwin Financial is the bank holding company of Irwin Union Bank and Trust and Irwin Union Bank, F.S.B. Its Chapter 7 case number is 09-13852.

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