NEW YORK (The Deal) -- Northwest Bancorporation of Illinois filed for Chapter 11 with a prepackaged reorganization plan that calls for it to reduce its junior subordinated debenture and trust preferred securities obligations by 77.5%.

The Palatine, Ill., bank holding company for First Bank and Trust Co. of Illinois filed its petition on Wednesday in the U.S. Bankruptcy Court for the Northern District of Illinois in Chicago, claiming that effects from the economic downturn in 2007 had hurt First Bank, leading the Federal Deposit Insurance Corp. in 2011 to restrict the bank from paying dividends to the holding company.

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