IndyMac Bancorp to Liquidate

IndyMac Bancorp filed for Chapter 7 bankruptcy protection Friday in Los Angeles and will be liquidated to pay off its creditors.

The Pasadena, Calif.-based thrift became the largest bank failure in the history of the Federal Deposit Insurance Corporation last month. In the best-case scenario, IndyMac will be able to pay back lenders in full, but in the worst case, only about one-tenth of its debt will be reimbursed, according to a filing posted to the Web site of the federal bankruptcy court for central California.

The document, signed by CEO Michael Perry and an attorney, estimated that IndyMac has between $50 million and $100 million in assets, but $100 million to $500 million in liabilities. IndyMac Bancorp has fewer than 50 creditors, though the filing only relates to those who lent to the holding company, and not its retail bank customers.

IndyMac Bank is now operated by the federal government and is no longer connected to the holding company, IndyMac Bancorp. At the time of its government takeover on July 11, the FDIC said IndyMac Bank had as much as $1 billion in uninsured deposits held by approximately 10,000 depositors. Those unlucky patrons were set to meet with FDIC claims agents last month, but only promised an advance payment worth 50% of their uninsured funds.

The FDIC estimated its total IndyMac-related payout would be between $4 billion and $8 billion.