From Chicago Sun-Times, June 5th.
A bankruptcy court approved Spiegel Inc.'s plan to liquidate its First Consumers National Bank subsidiary, which issued private-label credit cards to the retailer's customers before Spiegel filed for bankruptcy.
Judge Cornelius Blackshear of the U.S. Bankruptcy Court in Manhattan signed an order last Thursday that approved the liquidation plan for the credit card unit. First Consumers National Bank isn't part of the Chapter 11 proceedings.
The order also authorized Spiegel to appoint James E. Huston, the company's chief executive and president, as the liquidation agent for First Consumers National Bank.
Spiegel has historically divided its operations into a retail merchandising division and a bank-card segment, the company said in its motion from May 16. The firm's retail businesses operate through its Eddie Bauer, Spiegel Catalog and Newport News merchant divisions, each of which are debtors in the bankruptcy proceedings.
Before Spiegel filed for bankruptcy March 17, First Consumers National Bank issued private-label credit cards to customers of the merchant companies.
First Consumers National Bank is mainly regulated by the Office of the Comptroller of the Currency, the motion said. Under an order from the Office of the Comptroller of the Currency, Spiegel and its merchant companies are in the process of exiting the bank-card business.
In March, the bank subsidiary ceased issuing private-label or other credit cards, the motion said. As a result, First Consumers National Bank's operating activities are now limited to credit-card servicing and related matters.
Under the plan, the bank would keep enough funds in deposit so it can remain insured until its national bank charter remains outstanding. It wasn't clear Wednesday when the charter will expire.
The bank will discontinue its services June 30 and begin the liquidation process. First Consumers National Bank will pay, compromise or settle all of its nondeposit liabilities. As an alternative, the bank would either establish a liquidating trust for creditors or merge with a related, nonbank entity.
In a release May 16, CardWorks LP said it signed a successor servicer agreement to service the Spiegel private-label credit card portfolio. CardWorks is the parent company of Cardholder Management Services, a third-party bank-card servicer.
Cardholder Management Services will take over servicing the accounts from First Consumers National Bank on June 30, the news release said.
In addition to First Consumers National Bank, Spiegel's bank-card segment also included Financial Services Acceptance Corp., which isn't in bankruptcy.
Spiegel, a Downers Grove-based retailer of apparel and home furnishings, listed assets of $1.74 billion and debts of $1.71 billion as of Feb. 22 in its Chapter 11 filing.
Shares of Spiegel were unchanged at 10 cents Wednesday on the over-the-counter Bulletin Board.
Ap
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