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January 5, 2009 3:00 PM

Cleary, Simpson, S&C on IndyMac Deal

Posted by Rachel Breitman

A coalition of investors believe there are profits to be realized from shuttered IndyMac Bank, F.S.B. The group will buy the fallen bank for $13.9 billion from the Federal Deposit Insurance Corporation.

The Office of Thrift Supervision closed the troubled Pasadena-based institution in July after a run on the bank over the summer. IndyMac's estimated assets at the time of its closing were worth more than $32 billion.

The buyers include: buyout investor J. Christopher Flowers, of J.C. Flowers & Co., LLC ; hedge fund operator John Paulson of Paulson Investment Company, Inc. and the financial funds Stone Point Capital; George Soros' SSP Offshore LLC; Silar MCF-I LLC; and MSD Capital, which manages capital for Michael Dell and family. The coalition had applied to the Office of Thrift Supervision in hopes of converting IndyMac from a mutual savings bank to a stock-held institution. The buyers are operating as a thrift holding company controlled by IMB Management Holdings and led by Steven Mnuchin, chair of the private equity firm Dune Capital Management LP. Terry Laughlin, a former head of Merrill Lynch Bank & Trust, will serve as chief executive of IndyMac.

Cleary Gottlieb Steen & Hamilton is lead counsel to the consortium, handling M&A, regulatory, structuring and tax matters lead by Paul Glotzer and William Groll.  Weiner Brodsky Sidman Kider partners Harvey Weiner and Troy Garris also advised on mortgage banking compliance and regulatory matters.

Corporate partner Mitchell Eitel and tax partner Ronald Creamer from Sullivan & Cromwell advised Flowers on the matter. Eitel had previously advised Flowers on its canceled plan to acquire Sallie Mae as well as on its successful acquisition of Fox-Pitt Kelton.

Corporate partners Barrie Covit and Thomas Bell from Simpson Thacher & Bartlett also advised Flowers on the deal along with tax partner John Creed and executive compensation and employee benefits counsel Jamin Koslowe. MSD Capital and Stone Point Capital were represented by Peter Gordon, Maripat Alpuche, and Gary Mandel, also of Simpson Thacher.

Fried Frank corporate partners Tom Vartanian, David Ansell, and Brian Mangino advised Paulson. SSP Offshore was represented by Maurice Lefkort at Willkie Farr & Gallagher and S&C bank regulatory partner Andrew Gladin. 

"This agreement achieves the goals that were set out by the chairman and board when the FDIC was named conservator of IndyMac in July," says FDIC Deputy Director James Wigand in a statement. "Unfortunately, as expected, IndyMac's liability structure, combined with aggressive real estate lending in California, had a significant impact on losses."

The deal hit a snag early last week when Fannie Mae demanded the FDIC settle a claim it has about home loans purchased from IndyMac, requesting that it buy back close to $1 billion in failed mortgages. Of the 25 banks that have failed so far this year, IndyMac is the only one the FDIC struggled to immediately unload.

The deal, announced Friday, is expected to close in late January or early February.

 


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