On October 29, 2012, First Place Financial Corp., the holding company for First Place Bank (collectively, "First Place Bank" or "First Place"), filed Chapter 11 petitions for bankruptcy in the United States Bankruptcy Court for the District of Delaware. Based in Warren, Ohio, First Place Bank is a federally chartered stock savings association that is insured by the FDIC. See Declaration in Support of First Day Motions (the "Decl.") at *2. First Place operates over 40 branches in Ohio, Michigan, Indiana, and Maryland and describes itself as one of the "largest thrift institutions in the state of Ohio." Decl. at *2. The company’s business model focuses on investing customer deposits in residential mortgage, home equity, commercial and construction loans. Id.
Events Leading to Bankruptcy
First Place Bank is regulated by the Office of the Comptroller of the Currency (the "OCC"). However, prior to July 21, 2011, First Place was regulated by the Office of Thrift Supervision (the "OTS"). The OTS merged with the OCC effective July 21, 2011. Decl. at *3, fn.1. First Place has come under increased scrutiny by the OCC and OTS due to "excessive levels of adversely classified assets and inability to raise necessary capital …" Decl. at *5. These bad debts and poor liquidity, in turn, arose from the housing crisis that began in 2008, with drops in housing prices, increases in loan defaults and high unemployment. Decl. at *3.
The OTS conducted examinations of the bank in August of 2010 and May of 2011. As a result of the examinations, First Place Bank was found to have been operating with high levels of bad debts, poor earnings and inadequate levels of capital. Decl. at *5. The OTS required First Place to enter into Supervisory Agreements that were intended to develop plans to address problems at the bank. Despite the Agreements, the bank’s condition continued to worsen resulting in the OTS issuing a Cease and Desist Order on July 13, 2011. Decl. at *5. The Cease and Desist Order provided that if First Place Bank was unable to meet certain targets by December 31, 2011, the bank was required to submit a contingency plan that provided for a merger with another federally insured bank or voluntary dissolution. Decl. at *6.
Once First Place realized it was unable to satisfy the requirements of the Cease and Desist Order, it started considering ways in which to proceed with a merger or sale. In June of 2012, First Place’s investment banker began marketing the company to qualified purchasers. Of the 44 potential purchasers identified by First Place, 15 expressed interest and 4 engaged in on-site due diligence. Decl. at *7. Of the four, only one entity, Talmer Bancorp, Inc., expressed an interest in acquiring First Place Bank. Decl. at *8.
Objectives in Bankruptcy
First Place and Talmer Bancorp ("Talmer") executed an asset purchase agreement on October 26, 2012. According to the bank, if the Bankruptcy Court approves the sale to Talmer, First Place will be able to comply with OTS and OCC regulations, jobs will be saved and the bank will get to continue serving its customers. Decl. at *8. Under the Sale Agreement, First Place would be recapitalized to $205 million and Talmer would acquire the bank for $45 million. Id. After First Place entered into the asset purchase agreement with Talmer, the bank filed its chapter 11 petitions for bankruptcy hoping that the Delaware Bankruptcy Court will approve the proposed sale and allow remaining assets to be administered for the benefit of creditors. Decl. at *10.
The First Place Bank bankruptcy proceeding is before the Honorable Brendan L. Shannon. The case is proceeding under Case No. 12-12961(BLS). A copy of First Place Bank’s Petition for Bankruptcy is available here for review. A copy of First Place’s Declaration in Support of First Day Motions is available here. First Place is represented by the law firm Bayard, P.A.
Jason Cornell is an equity partner with the law firm Fox Rothschild LLP. Jason is a creditors’ rights attorney who is admitted and practices before the United States Bankruptcy Court for the District of Delaware. You can reach Jason at 302 427 5512 or email@example.com.
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