Court rules AmTrust Financial not obligated to maintain bank's capital

By Caroline Salls

Pittsburgh, June 13 - AmTrust Financial Corp. was not obligated to maintain the capital of AmTrust Bank, according to a Friday filing with the U.S. Bankruptcy Court for the Northern District of Ohio.

The Federal Deposit Insurance Corp., which serves as the bank's receiver, asked the court to rule that the company made a commitment to maintain the bank's capital by agreeing to a cease-and-desist order in November 2008.

However, the company argued that none of the documents cited by the FDIC, which also included a capital management policy submitted to the Office of Thrift Supervision and a three-year strategic business plan, contain a commitment to maintain the bank's capital.

According to the ruling, the OTC accepted a risk reduction plan from the company that "expressly disavowed any notion that [AmTrust] intended to provide any capital contributions in order to maintain the capital of the bank."

AmTrust Financial is the Cleveland-based holding company for AmTrust Bank. The company filed for bankruptcy on Nov. 30, 2009. Its Chapter 11 case number is 09-21323.

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