Kraz, LLC v. Branch Banking & Trust Co. (In re Kraz, LLC)

FINDINGS OF FACT AND CONCLUSIONS OF LAW

Michael G. Williamson, Chief United States Bankruptcy Judge

A shared loss agreement is a classic •win-win. Under the typical shared loss agreement, the FDIC absorbs 80% of the losses on a failed bank’s assets that are acquired by another bank. By absorbing a significant portion of the acquiring bank’s losses, the FDIC is able to sell distressed assets without steep risk discounts, increasing the distressed assets’ net present value. In exchange for backstopping an acquiring bank’s losses, the FDIC requires the acquiring bank to engage in prudent loan…