Lawyers All The Way Down
Bank Lawyer’s Blog:
If the old adage that “bad facts make bad law” is true, then perhaps a correct corollary is that “bad times make good lawsuits.” The recent firings and demotions of highly placed executives at very large financial institutions like Wachovia and Washington Mutual may have started a “trickle down” effect that has led to “rifts” between officers, directors and shareholders of much smaller community banks, rifts that have, in turn, led to litigation. At least, that’s apparently been the case in Atlanta.
The housing market’s collapse has opened rifts and created new
tensions within metro banks’ leadership ranks, stressing organizations
recently accustomed only to growth.
The trend of new bank formation has given way to CEOs and directors now resigning and, at one bank, shareholders suing.
[...]
At Alpharetta-based Alpha Bank & Trust, a group of shareholders are
attempting to change the bank’s strategic direction and board changes
through a lawsuit, filed May 27 in Fulton County Superior Court, after
that bank dismissed its founding CEO earlier this year. Alpha Bank
opened in 2006, rapidly expanding its real estate loan portfolio in
2007 as the building boom slowed.
[...]
Bankers said the real estate market’s rapid downturn added
pressures that can dramatically change how a bank’s leadership works
with each other, sometimes catastrophically.
“It can destroy an organization,” said Sonny Deriso, chairman of
Buckhead-based Atlantic Capital Bank and longtime bank executive and
attorney. “When everyone’s squared off, it’s too late to be settled
amicably.”
According to one expert opinion, much of the “squaring off” may be the result of the unrealistic expectations of investors who’ve not been through a prolonged economic down cycle in their short, sweet lives.
Deriso said that infighting can be worse among Atlanta banks that
were created during the boom solely to be sold after a few years of
operation.…