Advanta bankrupt; FDIC may take bank

Credit card lender Advanta Corp. of Spring House on Sunday filed a voluntary petition for reorganization under Chapter 11 of the US bankruptcy code. The case was filed a federal bankruptcy court in Wilmington, DE: 09-13931, before Judge Kevin Carey.

Advanta said in this statement it has "close to $100 million in cash" on hand, which "over time will not be enough" to pay all it owes, which includes "$138 million of senior retail investment notes outstanding." Bankruptcy "will, among other things, maximize recoveries of the senior retail note holders." Which doesn't mean they'll get all they're owed.

Banks don't go bankrupt - they get taken over by the Federal Deposit Insurance Corp. Advanta's bank unit, Advanta Bank Corp, with $2.7 billion in old loans from 360,000, isn't part of the bankruptcy filing. Instead, it faces a possible FDIC takeover: The company failed to get final FDIC approval for two reorganization plans earlier this year, doesn't have enough capital to meet federal guidelines, and "may be turned over to an FDIC receivership."

Advanta formerly employed over 1,000 at sites in Pennsylvania, Delaware, New Jersey, California and other states, but shrank to under 200 earlier this year as loan losses mounted and it stopped making new loans. More than 100 U.S. banks have failed so far this year.

For more information, Advanta has set up a toll-free number: 1-800-223-7074 and Web site: www.advantareorg.com.

Advanta President Bill Rosoff tells what went wrong in a court filing here; Advanta lists its debtors, including lender trustee Bank of New York Mellon Corp., plus local and national vendors (including a jet service) of which the largest are owed hundreds of thousands, in its bankruptcy petition here.