A decision Tuesday in a case remanded by the U.S. Supreme Court upheld the Federal Deposit Insurance Corp. (FDIC) as the rightful owner of a failed bank’s $4.1 million tax refund, the FDIC said in a release late Wednesday.
The FDIC said that in that case, the U.S. Court of Appeals for the Tenth Circuit determined that tax refunds generated by a failed bank belonged to the FDIC as receiver rather than the bankruptcy trustee for the failed bank’s parent company.
According to the release, United Western Bank (Denver, Colo.) failed in 2011, and its parent company, United Western Bancorp Inc., filed for bankruptcy soon after. Both the FDIC as receiver for the bank and the parent company’s bankruptcy trustee, Simon Rodriquez, claimed ownership of the bank’s $4.1 million tax refund. The bankruptcy trustee filed suit in bankruptcy court and prevailed, the FDIC as receiver appealed and prevailed there, and the case wound up at the U.S. Supreme Court.
The FDIC said the U.S. Supreme Court, in its decision, rejected the Bob Richards Rule, a federal common law rule that the Tenth Circuit had referred to in its initial decision favoring the FDIC, and vacated the judgment and remanded the case back to the Tenth Circuit to decide under state law. The Tenth Circuit reaffirmed its initial decision, holding that the outcome under state law is the same as it was under the Bob Richards rule.