The Federal Deposit Insurance Corp. has filed a notice of appeal in the U.S. District Court for the District of Delaware seeking to overturn last month’s decision by the Delaware bankruptcy court awarding a $374 million tax refund to the bondholders of Downey Financial Corp., the parent of failed home lender Downey Savings and Loan Association. Under the court’s decision, the tax refund will be divided up among Downey Financial’s creditors.
The FDIC filed the notice late last month in an effort to appeal In re Downey Financial, an Oct. 8 decision by U.S. Bankruptcy Judge Christopher S. Sontchi, but did not identify the portions of the ruling it plans to challenge. A statement of issues to be presented must be filed by Nov. 18, according to sources familiar with the case. The appeal has yet to be assigned to a federal judge.
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