Bankruptcy and Irwin Financial and Banking & Finance

Irwin Financial files for bankruptcy liquidation

September 21, 2009

Columbus-based Irwin Financial Corp. has filed for Chapter 7 bankruptcy, setting the stage for the liquidation of the remaining assets of the troubled banking company.

The bankruptcy petition, signed by Irwin CFO Gregory F. Ehlinger, lists between 200 and 999 creditors. It estimates Irwin’s assets between $10 million and $50 million, and its liabilities between $100 million and $500 million. Details about Irwin’s individual creditors and the amounts they’re owed were not disclosed.

On Friday, regulators seized and shut down Irwin’s two banking units: Irwin Union Bank and Trust, which had $2.7 billion and assets and $2.1 billion in deposits; and thrift Irwin Bank FSB, which had $493 million in assets and $441 million in deposits.

Irwin is represented in its filing by three Barnes and Thornburg attorneys: David M. Powlen, Mark J. Adey and Sarah Quinn Kuhny. Three attorneys from the firm Rubin and Levin—Elliott D. Levin, James T. Young and John C. Hoard—are named as trustees.

The Federal Deposit Insurance Corp. arranged Irwin's sale to Hamilton, Ohio-based First Financial Bank. First Financial already had bought Irwin's Carmel, Greensburg and Shelbyville bank branches in August. The purchase included Irwin's 27 remaining branches, 12 of which are in Indiana.

The collapse of Irwin's two units marks the 93rd and 94th failures this year of U.S. federally insured banks. The FDIC took on Irwin's riskiest assets and expects to book an $850 million charge to its insurance fund in connection to the failure.

Irwin Financial had been in financial decline for more than a year, in part because of steep losses on home equity loans. Over the last six quarters, Irwin posted losses totaling more than $450 million. Founded in 1871, it was one of the state's oldest banks.

 

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