A pull back of 16.67% to a closing price at $0.025 looked rather discouraging for those who hoped that the stock of the former holding company of Colonial bank may finally recover. The trading volume of over 9.2 million shares, along with the strong shorters’ interest for the stock during the last two days of last week, also did not suggest that CBCGQ has the chance for long term value gains.
Shortly after hitting the bottom, the currently traded on the pink sheets holding company finally received some good news last week. On Wednesday, it was announced that the Federal Deposit Insurance Corp will not be entitled to receive the $905 million it demanded from CBCGQ. The amount represented some capital shortfall that the FDIC claimed to have been suffered by the regulators when Colonial Bank was seized in 2009.
With assets of $42 million and liabilities of over $365 million at the end of July, the impact of that claim would have been overwhelming and the markets’ relief last week is understandable.
Though, the future of Colonial BankGroup looks still uncertain. The disputes on the company’s receipt of tax refunds are still running on and the amount to be received is not estimated yet. According to the latest SEC filing of CBCGQ, the management believes to have the right to receive up to $247 million as tax refunds from the Internal Revenue Service, though the way in which that amount will be sought and the timing of the payment are not clear yet.
In the meantime, Colonial Brokerage, a wholly owned subsidiary of the company, also filed for bankruptcy protection in June this year.[BANNER]
