Limited Partnership with the Federal Deposit Insurance Corporation
The inevitable failure of poorly run financial institutions is an unfortunate and uncomfortable reality for our society; hence the creation of the Federal Deposit Insurance Corporation (the “FDIC”) in 1933 during the Great Depression. The FDIC has since had to manage two noteworthy crises—the Savings and Loan failures of the 1980s and 1990s, and the more recent mass bank failures which are still occurring. Faced with the daunting task of taking over the management of thousands upon thousands of loans, the FDIC had to turn to outside resources.
This led to the birth of a public-private partnership program in which the FDIC is the Limited Partner and various private collection vendors serve as the FDIC’s General Partners. During the Savings and Loan crisis, nearly thirty of these Limited Partnerships were formed, of which only two remain. Value Recovery Group (“VRG”) is one of those remaining partners, and has been advised by the FDIC that we have always been their number one performer, both in terms of collections and helping to develop best practices for the program.
In the initial program, VRG managed over $1 billion worth of JDC assets from seventy two failed Savings and Loan institutions and commercial banks. In the recent banking crisis, VRG has thus far assumed responsibility for over $585 million worth of JDC assets from over 60 failed financial institutions. Also acquired in another RTC/FDIC public private partnership known as the “NP2 Series,” VRG serviced and liquidated $55 million in land loans and collateral from several thrift receiverships. VRG has collected over $61 million in the FDIC programs thus far and still has several very interesting and complex litigation matters pending which could result in further significant recoveries.
Most of these assets are Non-Qualifying, or legally uncollectable, when they are received, by virtue of bankruptcy discharges, prior settlements, expired statutes of limitations, death of insolvent obligors, prior sale to debt purchasers, etc. One of the asset management services that we provide is that we resolve every loan assigned to us with full substantiation, either by settlement or administrative closure. Settlements are submitted via Settlement Recommendations that set forth the Asset Manager’s analysis of the offer and alternatives in the event that the offer is declined, and that include documentation such as Financial Statements, tax returns, budgets, etc. Closures are submitted via Case to Close forms that fully describe the reason for closure and include supporting documentation pertinent to the closure (such as PACER Case Summaries or Discharge Orders for bankruptcies, Settlement or Purchase Agreements for previously resolved or sold assets, proof of insolvency for uncollectable debtors, probate records for deceased debtors, etc.). In fact, of the $585 million in JDCs that we have received in the current banking crisis, VRG has closed almost $273 million already, with over $14 million in collections.
Our customized collection software system from Columbia Ultimate, called Ajility, is used for the effective asset management of delinquent debts both domestically and internationally. This includes monitoring, tracking and reporting on investigative activities, collection efforts, pending litigation, bankruptcy proceedings, administrative resolutions, and other relevant criteria as dictated by our clients’ specific needs. This system is available via secure web access, allowing clients to view our account activity on a real-time basis.
In addition to our collection management expertise, our Asset Managers (most of whom are attorneys) engage in a great deal of litigation management. In this regard, our staff has experience in:
- Local litigation in the states where our staff attorneys are licensed, including contract actions to obtain judgment, post judgment discovery and executions, and a variety of complex legal proceedings that we have experience in doing that break through the barriers that some recalcitrant debtors erect in order to shield themselves and their assets.
- Legal forwarding to attorneys in other states, which includes analyzing and submitting the pertinent investigative research, providing specific instruction, and perhaps strategies, for the action(s) that we desire counsel to take, and even writing the requisite pleadings for use in the legal proceedings if it makes sense to do so.
We are very proud to have provided our services to the FDIC on a volume basis for the last twenty years without being the subject of a single substantiated complaint. Throughout our long-standing relationship with the FDIC, we have always retained our commitment to balance quality and quantity and to ensure that our client Partners achieve their financial goals while being protected from any type of exposure. VRG brings this philosophy to every new relationship that we form.