First bankruptcy sale of US bank

Author: Danielle Myles | Published: 11 Feb 2011

The sale of AmericanWest Bank (AmWest) as part of chapter 11 bankruptcy proceedings has used a novel sale structure that avoids the target being placed into receivership. And it’s likely the deal’s lawyers have set the groundwork for bigger bank sales to come.

SKBHC acquired the community bank from its struggling parent AmericanWest Bancorporation for $6.5 million pursuant to Section 363 of the Federal Bankruptcy Code (363 Sale). The Bankruptcy Court of Washington approved the transaction on the condition SKBHC recapitalised the target; it did this by injecting $185 million at closing.

"People have been considering for some time whether a Section 363 sale might be a viable means of dealing with a bank holding company near failure where the principal creditors are holders of trust preferred securities of the bank holding company," said Jeffrey Cohen, partner with Skadden Arps Slate Meagher & Flom which acted for...