The U.S. District Court's ceremonial courtroom was the only room large enough for a hearing for bankrupt Washington Bancorporation's creditors yesterday, but the stately surroundings didn't calm several dozen angry shareholders.
Dennis Early, the U.S. trustee in the case, told them it would do no good to form a special committee for shareholders. "The likelihood of getting anything back is almost nil," said Early. "Shareholders are the last to get anything."
"We put our hope and trust into this bank," said Annette Morchower, a shareholder in the parent company of National Bank of Washington. "You're telling us we get nothing? ... The directors were corrupt. What do we do, take legal action?"
"We thought we might get something," said another shareholder.
The Federal Deposit Insurance Corp. has estimated that NBW's failure will cause a loss to its fund of more than $500 million. The FDIC sold NBW to Riggs National Bank last month for $33 million, but Riggs gave back many of the bank's bad loans.
"It's hard to imagine how a bank can go under and the loss is $500 million unless somebody was really screwing up," said another shareholder in the midst of discussions among shareholders of suing former directors and officials of the bank.
Attorneys for some of the holders of millions of dollars in short-term debt that the bank defaulted on in May sat in relative calm at the hearing. Any recovery from the sale of WBC's remaining assets will likely be divided among them and other unsecured creditors.
However, the FDIC may be a competing unsecured creditor, according to Robert B. Ott, an attorney for WBC.
WBC's major assets are Washington Ventures Inc., a venture capital subsidiary that also has filed for bankruptcy, and National Bank of Maryland and National Bank of Virginia, which are still solvent and have assets of about $10 million between them.
Washington Ventures still could be sold as a going concern or its assets could be sold, according to another WBC attorney, Brian Leitch, as could the two banks. Luther H. Hodges Jr., WBC's former chairman, yesterday denied a report that he and Sunwestern Capital Corp., a Texas company of which he is a director, were trying to buy Washington Ventures.
Creditors might also expect some recovery from insurance, but WBC's directors and officers' insurance amounted to only $15 million, according to the attorneys.
WBC Chairman John J. Mason and President Michael F. Ryan are the only remaining employees of the bankrupt WBC. Each has taken a 50 percent cut in pay to continue sorting out the assets of the holding company, according to Ryan. Mason's annual pay was cut to $200,000, while Ryan's was pared to $150,000.
Mason, who attempted to find investors to raise enough money to save the bank, lost $6 million in stock when Washington Bancorp. failed.