Corus Bankshares Files for Chapter 11

NEW YORK (Reuters) – Corus Bankshares Inc (CORS.PK), whose banking unit was seized by U.S. regulators last September amid soaring losses on condominium loans, filed for bankruptcy protection on Tuesday.

The Chicago-based company filed for Chapter 11 protection from creditors with the U.S. bankruptcy court in Chicago, showing assets of $314.1 million and liabilities of $532.9 million.

Corus also announced the resignation of Chief Financial Officer Michael Minnaugh, effective June 30.

U.S. regulators seized Corus last Sept. 11 after the lender crumbled under soured commercial real estate and condominium loans in Arizona, Southern California, Florida and Nevada.

About $7 billion of deposits were transferred to MB Financial Inc (MBFI.O) in a transaction that cost the Federal Deposit Insurance Corp’s insurance fund about $1.7 billion.

Investors led by Barry Sternlicht’s Starwood Capital Group and private equity firm TPG Capital LP [TPG.UL] later won an auction for many Corus real estate assets for $554 million.

With an estimated $7 billion of assets, Corus was the seventh-largest U.S. bank by assets to fail in 2009, FDIC records show.

In a court filing, Chief Executive Randy Curtis said Corus’ main creditors are holders of trust preferred securities.

While trustees for those securities have been “generally supportive” of Corus’ efforts to maximize value, the company decided it was “appropriate” to restructure under Chapter 11, Curtis added.

The case is In re Corus Bankshares Inc, U.S. Bankruptcy Court, Northern District of Illinois, No. 10-26881. (Reporting by Jonathan Stempel; Editing by Steve Orlofsky)