Colonial BancGroup: FDIC objects to motion to approve disclosure statement on Feb. 3

By Lisa Kerner

Charlotte, N.C., Jan. 28 - The Colonial BancGroup, Inc. receiver the Federal Deposit Insurance Corp. objected to the company's motion to have its disclosure statement approved, according to a Friday filing with the U.S. Bankruptcy Court for the Middle District of Alabama.

The disclosure statement hearing is set for Feb. 3.

According to the FDIC, there is "significant litigation" pending and unresolved between the debtor, the official committee of unsecured creditors and the FDIC-Receiver, "the outcome of which could render the plan unconfirmable."

Specifically, there is pending on appeal litigation regarding the debtor's obligations to cure capital maintenance commitments related to its former subsidiary bank, Colonial Bank, the filing said.

The company filed its plan of liquidation and disclosure statement on Dec. 9.

Colonial BancGroup is the Montgomery, Ala.-based holding company for Colonial Bank. The company filed for bankruptcy on Aug. 25, 2009. Its Chapter 11 case number is 09-32303.

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