Silver State Bancorp TruPS holders' manager requests trustee removal

By Caroline Salls

Pittsburgh, Dec. 18 - Silver State Bancorp trust preferred securities holder manager Holdco Advisors, LP asked the U.S. Bankruptcy Court for the District of Nevada to remove James F. Lisowski Sr. as Chapter 7 trustee for Silver State's bankruptcy case, according to a Monday court filing.

Specifically, Holdco said it manages TruPS holders Financials Restructuring Partners, Ltd. and Financials Restructuring Partners III, Ltd.

According to the motion, the trustee faces personal liability from his distribution of a roughly $8 million 2006 tax refund.

If the distribution was improper, as the Federal Deposit Insurance Corp. has claimed, Holdco said the trustee could be forced to disgorge the $263,000 fee that he received nearly three years ago in connection with the $8 million distribution.

"This personal liability creates a conflict of interest with the estate," Holdco said in the motion.

Holdco said the FDIC's clawback action could motivate Lisowski to bargain away his personal liability instead of maximizing estate value regarding the $8 million 2006 tax refund, which has already been distributed, or the $16.3 million 2007 tax refund, which the trustee has not yet distributed.

Specifically, Holdco said Lisowski may give the FDIC a larger portion of the 2007 tax refund in exchange for a release of the FDIC's claims regarding his distribution of the 2006 tax refund and the related $263,000 fee that he received.

In addition, Holdco said "the trustee's recent conduct in the case indicates that he is, indeed, looking out for his own best interests over the interests of creditors."

Holdco said Lisowski has hired his own personal attorney, who attended Aug. 30 mediation between the FDIC, the indenture trustees and the trustee regarding the 2006 and 2007 tax refunds.

At that mediation session, Holdco said Lisowski and the FDIC struck a deal regarding the tax refunds "behind the backs of the indenture trustees while the indenture trustees were out to lunch."

"The moving creditors strongly doubt that the settlement will be in the best interests of the estate," Holdco said in the motion.

A hearing is scheduled for Jan. 22.

Silver State Bancorp, a Henderson, Nev., holding company for Silver State Bank, filed for bankruptcy on Jan. 6, 2009. The Chapter 7 case number is 09-10069.

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