Having bank holding companies file for protection is a cute move, but Judy Robbins isn’t fooled.
The objection filed Tuesday in the case of First Mariner Bancorp pointed to the circumstances surrounding an auction for the company that was conducted by investment firm Sandler O'Neill + Partners. According to the filing, Sandler O'Neill failed to disclose a relationship with one of the bidding parties— National Penn Bancshares Inc. --which it called evidence of the problems inherent in this trend….
"This lack of experience in bankruptcy proceedings is not unexpected, because Sandler O'Neill specializes in bank mergers and acquisitions, and banks are excluded from eligibility for bankruptcy protection," Judy Robbins, the Justice Department's U.S. trustee in the region, said in her objection.
"However, there is an emerging trend toward bank-holding-company bankruptcies, which appears to skirt the statutory restriction on affording banks the protections of Title 11. Therefore the quandary presented by Sandler O'Neill's flawed disclosure of connections is one that underscores the questionable practice of using bankruptcy courts to facilitate bank mergers and acquisitions," she said.