Bankruptcy Judge Restricts Trading in First Place Stock
WARREN, Ohio – A bankruptcy court judge has imposed “substantial restrictions on the trading of equity interests in First Place Financial Corp.
The share price of First Place Financial, traded over-the-counter since Nasdaq de-listed the stock Nov. 18, 2011, plummeted to 4 cents Oct. 31. The bank holding company, which filed Chapter 11 bankruptcy Oct. 29, sought and received approval to restrict trading Nov. 1.
The restrictions apply to “substantial equity holders” – individuals or entities that beneficially own – or at one time did own -- at least 905,793 shares of common stock or 5% of the company’s outstanding shares.
“The order was sought by the company in an effort to preserve its consolidated net operating loss carryovers, which are available to offset the company’s future taxable income, if any, and reduce the company’s federal income tax liability,” First Place said. The benefit of the net operating loss carryovers would be greatly reduced if a substantial ownership change would occur – 5% of the shares as defined by the Internal Revenue Service, the company explained in its court motion.
U.S. Judge Brandon L. Shannon, sitting in U.S. Bankruptcy Court for the Delaware District, agreed, stating in her order, “The relief requested…is in the best interest of the debtor, its estate and its creditors.”
Concurrent with declaring bankruptcy reorganization, First Place has agreed to sell the assets of its primary subsidiary, First Place Bank, for $45 million to Talmer Bancorp, based in Troy, Mich., If consummated by Jan. 31 as the parties hope, the assets sale would leave First Place Financial with only First Place Holdings, a much smaller subsidiary, and owing the U.S. Treasury $72.9 million in Troubled Asset Relief Program debt plus other liabilities.
In the assets purchase agreement, Talmer and First Place explicitly agree that Talmer would not assume any liabilities of the bank. Pending regulatory approval, Talmer did agree to infuse as much as $205 million in capital into First Place Bank so it could meet regulatory capital requirements.
Although Talmer intends to operate First Place Bank should bankruptcy court agree, it is also serving as bankruptcy court’s stalking horse bidder.
Judge Shannon will hold a hearing Nov. 15 on bid procedures; the subsequent sale hearing is set for Dec. 7.
IN-DEPTH COVERAGE:
First Place Bank to Keep Name Under Talmer Bancorp
First Place Defaults on $62 Million It Borrowed
First Place Files Chapter 11, Agrees to $45M Asset Sale
Copyright 2012 The Business Journal, Youngstown, Ohio.