The first checks for bankrupt Advanta Corp.'s retail note-holders, who are owed $140.6 million, could be cut by the end of this month, an attorney for the trustee overseeing Advanta's liquidation told a bankruptcy court judge in Wilmington on Tuesday.
Advanta, a Montgomery County credit-card bank for small businesses that collapsed during the deep recession of 2008 and 2009, had estimated in its liquidation plan last year that note-holders would receive at least $90.5 million of the money owed to them, with a chance of receiving 100 percent of their principal.
U.S. Bankruptcy Judge Kevin J. Carey approved that plan Feb. 10, and it became effective Feb. 28. Advanta had said in November that the initial payment of 30 percent of the total owed to note-holders was expected within 90 days of the effective date, which would have been near the end of May.
Robert K. Malone, a Drinker Biddle & Reath L.L.P. attorney representing Advanta's liquidating trustee, declined to comment after Tuesday's hearing about how much money the company's 2,644 note-holders - many of whom are retirees on fixed incomes - would receive in their first check.
Malone told the judge that the trustee who had assumed control of the claims database from Advanta had prepared systems to make the initial distribution, but was still sorting through certain claims.
Among the significant outstanding issues is a dispute with the Federal Deposit Insurance Corp., which in March 2010 closed Advanta's bank subsidiary, which had issued its credit cards at an estimated loss of $459.1 million. The FDIC has a potential $50 million claim against the bankrupt company.
Advanta's most recent financial report, filed in bankruptcy court, showed that the company had $107 million in cash, with more money expected to come from the sale of assets and the proceeds from the remnants of the credit-card operation.