MADISON, WI (WTAQ) - The parent company of Madison’s Anchor Bank has filed for bankruptcy, so it can get out from under millions in debts, and provide new money to be a major lender again.
Anchor BanCorp said it raised $175 million from numerous investors to re-capitalize Wisconsin’s fourth-largest bank. Holding company official Chris Bauer said the move would save Anchor Bank and its 700 jobs – and it will allow the bank to continue operating as normal.
Anchor has not made a profit in its last five fiscal years, in the wake of commercial loans that went sour during the Great Recession. If a bankruptcy judge approves, Anchor would wipe out two major debts – $139 million to the federal government’s Troubled Asset Relief Program, and $183 million to a group led by U.S. Bank, which Anchor borrowed to buy another bank in Wisconsin.
The TARP loan would be forgiven in exchange for $6 million in new common stock. Bauer says the U.S. Treasury would sell the stock, and end its ownership in Anchor. He says the U.S. Bank group has agreed to take $49 million to settle its debt.