Veluchamy v. Fed. Deposit Ins. Corp., No. 10-3879 (7th Cir. 2013)

Plaintiffs controlled Mutual Bank. In an effort to save the bank from insolvency, at the request of FDIC-Corporate, they raised about $30 million mostly in the form of note purchases. In 2008, FDIC-Corporate requested another $70 million, which they were unable to raise. In 2009, regulators issued warnings about the bank. The bank’s board voted to redeem the notes and create deposit accounts for plaintiffs, essentially returning their money. Before FDIC-Corporate responded to a request for required approval, 12 U.S.C. 1821(i), the bank was declared insolvent and FDIC was appointed as receiver. Mutual Bank’s branches opened as branches of United Central Bank the next day. The plaintiffs filed proofs of claim, seeking to redeem the notes and obtainthat the bank would soon go under without more capital. On July 1, 2009, the board of Mutual Bank voted to redeem the $30 million in notes and convert the proceeds into personal deposit accounts belonging to two of the Veluchamys, essentially returning their money, but this transaction could not occur without the approval of FDIC-Corporate. See 12 U.S.C. § 1821(i). Thirty days later, without a response from FDIC-Corporate, the bank was declared insolvent, and the FDIC was appointed as the receiver of the bank. FDIC-Receiver moved quickly to arrange with United Central Bank to assume the bank s deposits, and Mutual Bank s branches opened as branches of United Central Bank the next day. Plaintiffs then filed proofs of claim with FDICReceiver seeking to redeem the notes