Failing CDCU Hauled Into Bankruptcy Proceeding

DENVER – The $2.4 million, 1,398 member Denver Community Development Credit Union merged with the $196 million Denver Community Federal on June 25. But the same day, according to Denver Community Federal, one of its members’ hauled it into court in an involuntary chapter 11 bankruptcy proceeding. “As far as we know, the member was not a creditor of the credit union but a member who was seeking to preserve the credit union from the emergency merger,” said Branda Anderson, COO of Denver Community Federal. “It’s our understanding that the matter is being wrapped up legally,” she said. None of Denver CDCU’s officers came with the credit union in the merger and Anderson said that the credit union had not yet decided whether to open a branch on Denver CDCU’s site. The credit union already had a branch close to that area, she explained. “What we plan to do now is to focus on getting those [former members of Denver CDCU] debit and ATM cards,” Anderson said. “They haven’t had them before and there is a real demand for them,” she added. A credit union cannot declare bankruptcy or be declared bankrupt, according to Frank Kressman, staff attorney for the NCUA. A credit union can be put into conservatorship or it can be declared insolvent and liquidated, but it can’t be declared bankrupt in a court proceeding like an individual or corporation can, Kressman explained.