Manufacturers Hanover Trust Co. has withdrawn as leader of the syndicate of banks in the A.H. Robins bankruptcy reorganization rather than reveal details of its financial health.
The syndicate was to provide a $1.675 billion letter of credit under a reorganization plan proposed by Robins in April. Lawyers for some of Robins' creditors asked for secret bank examiners' reports to verify that the bank would be able to make good on the letter of credit, but the bank and federal regulators balked at disclosing the reports even to the court.
Last Friday, Robins and Rorer Group Inc. agreed to merge under a new financing arrangement in which Manufacturers Hanover would not play a leading role.
In a letter to U.S. District Court Judge Robert R. Merhige Jr. Monday, William J. Manning, a lawyer for Manufacturers, said the bank has decided "for various reasons" to withdraw from the original loan group. Bank spokesman John J. Stefans said the merger agreement made Manufacturers' role "academic," cited Rorer's intention to arrange its own financing and noted that his bank's commitment to Robins expired Friday.
Manning said Manufacturers' withdrawal makes it unnecessary for the Federal Reserve System and the Federal Deposit Insurance Corp. to provide records of examinations of the bank.
Attorneys for women injured by Robins' Dalkon Shield contraceptive had subpoenaed the records. Judge Merhige had denied the regulators' motion to quash the subpoenas, calling the agencies "asinine" for encouraging a perception "that there may be something wrong with" Manufacturers'.
The Fed and the FDIC angered Merhige by rejecting disclosure of the reports even to the judge alone. The agencies contended that "anything short of a wholehearted endorsement" after such disclosure would have a "potential for fueling speculation that would start a run on multinational banks."