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Presenting a live 90-minute webinar with interactive Q&A FDIC's Expanded Role in Bank Holding Company Insolvencies Navigating the Complexities of Banking Regulators' Participation in the Bankruptcy Process THURSDAY, JULY 26, 2012 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Todd C. Meyers, Partner, Kilpatrick Townsend & Stockton , Atlanta Ivan L. Kallick, Partner, Manatt, Phelps & Phillips , Los Angeles James D. Higgason, Partner, Diamond McCarthy , Houston The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .

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Topic Agenda I. Overview A. Chapter 7 v. Chapter 11 B. Key Questions to Address in BHC Bankruptcies C. FDIC’s Role in the Case D. The Nature Of BHC Debt II. Key Issues Presented in BHC Bankruptcies A. Who Owns the Tax Refund B. Directors' and Officers' Litigation: BHCs v. FDIC C. Capital Maintenance Claims D. Fraudulent Transfer and Preference Claims III. Title II of Dodd-Frank

FDIC’S EXPANDED ROLE IN BANK HOLDING COMPANY INSOLVENCIES Navigating the Complexities of Banking Regulators’ Participation in the Bankruptcy Process Ivan L. Kallick, Presenter ikallick@manatt.com 310.312.4152 Thursday, July 26, 2012, 1 pm EST, Noon CST, 11 am MST, 10 am PST Sponsored by the Legal Webinar Group of Strafford Publications

The View From Above...... FDIC AIR 7 BANK HOLDING COMPANY BANK HOLDING COMPANY Chapter 11 Chapter 7 United States Bankruptcy Court OPERATING BANK OPERATING BANK Manatt, Phelps & Phillips, LLP

I. Understanding the issues and the questions to ask 8 In the context of a bank holding company bankruptcy having been filed or about to be filed, it is important to examine and understand these common issues and questions:  Does the BHC have illiquid assets?  Does the BHC have liquid assets?  Does the BHC have an operating Bank subsidiary?  Did the BHC have an operating bank subsidiary?  Does the BHC have a non-operating Bank subsidiary?  Did the BHC have an operating non-bank subsidiary?  Does the BHC have a tax sharing agreement with its subsidiary?  Did the BHC abide by the terms of the tax sharing agreement? Manatt, Phelps & Phillips, LLP

I. Common Issues to Be Examined and Understood - continued 9  Does the BHC have a right to such an IRS refund?  Is there a claim to be made and realized under a D&O policy?  Is there a claim to be made and realized under any other insurance policy?  Who holds the BHC debt?  Did the BHC down-stream or side-stream funds and when did they do it?  Did the BHC and the Bank subsidiary have common directors and/or officers?  Were there any extraordinary payments or disbursements to/benefit of insiders?  Is anyone interested in recapitalizing the subsidiary Bank?  Is anyone interested in the tax refund?  Who is the Bankruptcy Judge?  In what Circuit is the case pending?  Other than the FDIC and the TRUPS, are there other active constituent participants? Manatt, Phelps & Phillips, LLP

II. FDIC’s Role in a Chapter 7 case 10 What if . . . . .  There is no cash...  There is no operating subsidiary...  There is no tax refund...  There is no D&O claim...  There are no Directors and/or Officers to operate...  There are no other insurance claims. Then . . . . .  File Chapter 7.  Turn over the keys.  No role for directors and/or officers.  The Chapter 7 Trustee earns his/her $65.00.  FDIC is a bystander. Manatt, Phelps & Phillips, LLP

III. FDIC’S Role in a Chapter 11/Section 363 sale 11  BHC has presently operating bank subsidiary, but its troubled.  BHC has reasonably marketed and there is a buyer/someone interested in re- capitalizing the troubled bank.  Troubled bank may or may not be its only operating subsidiary.  FDIC is in the bank or has reserved a floor at the local hotel or motel.  The major debt holders at the BHC level are the Trust Preferreds – TRUPs.  Recapitalization makes sense, and FDIC may think so, too.  Recap made impossible by TRUPs holders – their ownership is divergent and uncertain.  Chapter 11 - § 363 sale.  Court order is your title policy.  AmericanWest Bancorp , USBC, Eastern District of Washington, Case No.10-06097- PCW11.  What happens after the sale is approved or not approved. Manatt, Phelps & Phillips, LLP

IV. FDIC’s Role in a Chapter 11 – the liquidating plan 12  BHC’s only asset was an operating bank subsidiary.  BHC has enough cash to file Chapter 11.  BHC and operating Subsidiary had a tax sharing agreement.  Chapter 11 formalities.  Chapter 11 transparency.  Chapter 11 expenses.  Chapter 11 Disclosure Statement and Plan.  Liquidating plan for the benefit of: – TRUPS – FDIC Manatt, Phelps & Phillips, LLP

IV. FDIC’s Role in a Chapter 11 – the liquidating plan 13  The Tax Refund: – BHC’s and operating bank subsidiary enter into a Tax Sharing Agreement. – Usually a matter of state corporate law. – What if both file a consolidated return. – What is historical scenario – downstream the money. – 26 USC § 1501 – BHC and bank are “affiliated companies”. – Oftentimes, TSA says who files and who actually pays. – Chapter 11 filed – who files return for refund » Option 1 – Debtor » Option 2 – FDIC » Option 3 – Both – Two Schools – Two Positions » BHC/Bank are in a debtor/creditor relationship » IndyMac , 12-cv-02967-RGK (USDC CD CA, 5/30/2012) » NetBank , 3:11-cv-11-5-32 (USDC MD Fla, 6/25/2012) » BankUnited , 462 BR 885 (SD Fla 2011) » Coupon Clearing , 113 F 3d. 1091 (9 th Cir. 1997) » M Corp , 170 BR 899 (SD Tex 1994) » BHC/Bank are in a trust relationship » Bob Richards , 473 F 2d 262 (9 th Cir. 1973) » Lubin v. FDIC , 1:10-cv-00874-RWS (USDC ND GA, 2011) Manatt, Phelps & Phillips, LLP

IV. FDIC’s Role in a Chapter 11 – the liquidating plan 14  Examples – What issues have been briefed and decided and current status – IndyMac , USBC Central District of CA, 2:08-bk-21752-BB – Imperial Capital , USBC Southern District of CA, 09-19431-LA!! – FirstFed , USBC Central District of CA, 2:10-bk-12927-ER – Corus , USBC Northern District of Illinois, 10-26881 (PSH) – NetBank , USBC Middle District of Florida, 3:07-bk-04295-JAF – First Regional , USBC Central District of CA, 2:12-bk-31372-ER – Vineyard Bancorp , USBC Central District of CA, 2:10-bk-21661-RN – Harrington West , USBC Central District of CA, 9:10-bk-14677-RR Manatt, Phelps & Phillips, LLP

FDIC’s Expanded Role in Bank Holding Company Insolvencies Directors’ and Officers’ Litigation: Bank Holding Companies v. FDIC Presented by Todd C. Meyers of Kilpatrick Townsend & Stockton LLP Partner and Chair of the Bankruptcy and Financial Restructuring Team Tmeyers@kilpatricktownsend.com 404.815.6482

Introduction • Causes of action against former officers and directors of a bankrupt bank holding company are one of the most valuable assets of a debtor’s estate. • However, disputes often arise with the FDIC over ownership of such causes of action because the bankruptcy trustee and FDIC oftentimes are suing the same persons, many of whom were officers and directors of both the holding company and the failed financial institution. • The competition is intensified when insurance coverage and other assets can satisfy only a fraction of the likely valid claims. 16

FIRREA • The dispute over ownership of causes of action arises in the framework of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (“ FIRREA ”). • FIRREA gives the FDIC the exclusive right to assert all derivative claims on behalf of a bank in receivership. 12 U.S.C. § 1821(d)(2)(A)(i). • Nevertheless, a holding company may bring a cause of action against its own officers and directors for breach of their fiduciary duties owed to the bank holding company, which is a direct claim. 17