A bank has turned to its creditors to help with its bankruptcy process after its shares were suspended and its business had to be wound down.
In March, corporate recovery services company CapitalCare took over the business of Bank of America Corp. in order to recover $9bn of bank loans, but the firm was forced to take a $7bn haircut to make it solvent.
The bank’s debt has increased from $1.7bn to $2.3bn, which is why it is turning to creditors to secure payments from the government and others.
The company is looking to repay the government for a loan of $500m in August, but is not able to pay its creditors, including US-based Bank of New York Mellon Corp.
It is now seeking to secure a $2bn loan from the US government for the purpose of meeting its debt repayment obligations.
CapitalCare’s CEO, Bill Johnson, said in a statement that the government has given the company a clear mandate to pay interest on its $1bn loan.
“We have been working closely with the Treasury Department to ensure that the $2 billion in principal repayments that we have secured will not be affected by the potential delay that could result from the suspension of the corporate recovery loan,” Mr Johnson said.
“Our goal is to pay our bills and meet our obligations in the near future.”
This loan is secured by CapitalCare’s capital, meaning that our capital and assets are fully secured.
“Mr Johnson also said that he had asked the US Treasury Department’s Federal Reserve Board to allow the company to issue another $2billion loan for CapitalCare.”
While we have been unable to secure this additional $2-billion loan, we are hopeful that the Federal Reserve will allow us to continue to meet our debt obligations, including our interest repayments,” Mr Hill said.