showdown in the american west - Morrison Foerster

showdown in the american west - Morrison Foerster

SHOWDOWN IN THE AMERICAN WEST MAIN STREET VS. WALL STREET THE GREAT FINANCIAL CRISIS OF 2008 had devastating effects on banks, both large and small, ...

14KB Sizes 0 Downloads 0 Views

Recommend Documents

the top - Morrison Foerster
San Francisco. Climan, Richard Eo, Cooley Godward. Kronish, Palo Alto. Cooke, David Do, Allen Matkins. Leck Gamble Mallo

Stuetzle, Christiane - Morrison Foerster
She advises several major Hollywood studios and independent film & television producers and distributors on internationa

Client Alert - Morrison Foerster
Oct 14, 2014 - However, the UK government has now upheld its subsequent promise to re-publish the statutory instruments

Client Alert - Morrison Foerster
Sep 17, 2014 - In those actions, the SEC set forth the underlying legal framework for ... A beneficial owner filing a Sc

Repackagings - Morrison Foerster
Feb 22, 2011 - Investment Company Act. In reaching this conclusion, the Staff particularly noted: (1) investors who wish

Fox, Benjamin - Morrison Foerster
Kling v. Hallmark Cards, et al. (9th Cir. 2003.) Won appeal preserving victory in copyright infringement litigation that

Structured Thoughts - Morrison Foerster
2 days ago - While the VIX Index tends to rise while the stock market falls, thus ..... such as Ponzi schemes and microc

Comey, Charles - Morrison Foerster
Walmart Global eCommerce's $1.5 Billion Strategic Alliance with Represented Walmart and its Global eCommerce div

exhibit d - Morrison Foerster
HAYNES AND BOONE, LLP. One Houston Center. 1221 McKinney, Suite 2100. Houston, Texas 77010. SHUMWAY VAN & HANSEN, CHTD.

Maynard, Deanne - Morrison Foerster
Clients describe Ms. Maynard as “ wicked smart” ( Chambers USA) and “ one of the finest advocates in the Supreme C


THE GREAT FINANCIAL CRISIS OF 2008 had devastating effects on banks, both large and small, throughout the United States. From a distance, AmericanWest Bank may have appeared indistinguishable from hundreds of its peers. In its corner of the American West, however, AmericanWest Bank was anything but ordinary. A community bank in the truest sense of the term, AmericanWest served not only its hometown of Spokane, Washington, but also, through a far-flung branch network, over 77,000 customers residing in scores of small communities in Eastern Washington, Northern Idaho and Utah.

In many of these small towns,

AmericanWest Bank was the only significant bank. It played an important civic role in many of its communities, providing jobs and supporting local businesses, schools and charities. By early 2010, the capital of AmericanWest Bank and its holding company, AmericanWest Bancorporation (“AWBC”), had been substantially depleted. The Bank had a pressing need to recapitalize in order to meet regulatory requirements and avoid failure.

AWBC had been in discussions with a number of potential investors and

strategic partners with respect to a possible recapitalization and/or sale, but there was a major stumbling block: investors were discouraged from investing new capital in AWBC by reason of the more than $40 million in AWBC’s outstanding debt obligations in the form of trust preferred securities, or “TruPS.” The TruPS would have stood in front of any new capital provided to AWBC. Adding to the complications, AWBC’s TruPS had been repackaged into several different large pools of TruPS backing collateralized debt obligations, and those CDOs, in turn, issued bonds to investors—a common structure for billions of dollars of TruPS issued by holding companies of community banks throughout the country. To make matters worse, many of the CDOs had been acquired at deeply discounted prices from their original holders by opportunistic Wall Street hedge funds and traders who planned to profit by forcing AWBC to pay off the TruPS underlying the CDOs at their face value, far more than their market value, as a condition for permitting a

lifesaving investment to go forward. If successful, these players would have multiplied the value of their investment many times over. By all appearances, these speculators were prepared to play chicken with AWBC and were more than willing to risk the failure of AWBC and the Bank. The very presence of these obstructionists was enough to prevent most potential investors from taking an interest in AmericanWest. AmericanWest Bank and AWBC came to Morrison & Foerster to help them find a way to save the Bank. A multi-disciplinary and multi-office team of Morrison & Foerster bankruptcy, capital markets and regulatory lawyers devised a creative and previously untested strategy that called for placing AWBC into a Chapter 11 bankruptcy and selling the Bank to an investor group out from under the bankrupt holding company, all while working closely with bank regulators to keep them from closing the Bank as a result of its holding company’s bankruptcy—the usual result. The funds vehemently objected to the Morrison & Foerster approach in a highstakes bankruptcy court battle, but the Spokane bankruptcy judge ultimately agreed with Morrison & Foerster that the better result was to let the Bank live. As a result of the successful Morrison & Foerster strategy and AmericanWest Bank’s courage to confront the funds, 540 grateful bank employees kept their jobs, the rural residents of three Western states kept their valued local community bank, and U.S. taxpayers, according to FDIC estimates filed in the court proceedings, saved $330 million that would have been lost if the game of chicken had continued and the Bank had gone under.