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The Federal Deposit Insurance Corporation (FDIC), as the appointed receiver of hundreds of failed domestic banks, is in the midst of litigation in several jurisdictions with the creditors of certain bank holding companies over the right to billions of dollars in tax refunds. The FDIC argues that as the statutory successor to certain defunct banks, it—not the debtor holding companies—is entitled to the substantial tax refunds generated by the shuttered banks’ operating losses. The majority of U.S. bankruptcy and district courts to have considered this issue have disagreed. Just last month, for example, the U.S. Bankruptcy Court for the District of Delaware in In re Downey Financial Corp.1 held that a $364 million tax refund was property of the debtor bank holding company’s bankruptcy estate and available for distribution to its creditors. In so holding, the court joined several bankruptcy and district courts across the country, which had previously rejected the FDIC’s position upon consideration of similar facts.2

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