A Maryland state agency asked a Baltimore Circuit Court judge today to place the crippled Old Court Savings and Loan Association into receivership, an action that would essentially place the Baltimore thrift into bankruptcy and allow the state to begin a more orderly liquidation of its assets.
Judge Joseph H.H. Kaplan, who will hold a hearing Friday on the receivership request, also will be asked by the Maryland Deposit Insurance Fund (MDIF) to halt immediately all interest payments to Old Court's 70,000 depositors. MDIF, the conservator of Old Court since May, estimated that continuing to make interest payments on savings accounts and certificates of deposit would saddle the association with additional losses of about $10 million every three months.
Interest on most accounts at Old Court have been limited to 5 1/2 percent since early June.
If Kaplan approves the order as expected, MDIF would be empowered to sell or otherwise dispose of Old Court's assets, currently estimated at $600 million, with the ultimate goal of returning deposits to account holders.
However, even if all of Old Court's assets are sold and depositors are paid, the thrift still could owe depositors $175 million to $200 million, according to Kaplan. One source who is intimately familiar with Old Court's far-flung loan portfolio estimated today that figure could reach $250 million.
Placing Old Court into receivership would give the state essentially a free hand in liquidating the thrift's assets without incurring possible civil suits by the association's owners. The state had moved slowly in disposing of Old Court's assets because officials feared the owners would claim in court that the state sold properties for less than they are worth.