LOS ANGELES-NCUA, which has assumed millions of dollars in soured member business loans from the failure of Telesis Community CU, has asked a federal court to move a dispute over a venerable Pasadena, Calif. office building financed by the Chatsworth credit union to federal court, one of the first of a number of legal battles the federal regulator is expected to inherit from May's liquidation of the one-time $625-million credit union.
The dispute surrounds an $11.95-million MBL that Telesis provided in 2008 to a local partnership to buy the 64,000-square-foot Star News building in downtown Pasadena, the one-time home of the local newspaper that now houses a combination of businesses. The partnership had defaulted on the loan by 2010, prompting Telesis to foreclose and ask a state court to appoint a receiver as the outstanding balance of the loan grew to more than $12 million.
In court documents, NCUA said it has the right to move the dispute to federal court as liquidator of Telesis. The federal courts are more favorable to federal agencies in their claims under federal law. "By operation of the law, the Liquidating Agent succeeds to all rights, titles, powers and privileges of the Credit Union," said NCUA in its brief submitted to the U.S. District Court for the Central District of California.
NCUA assigned the remnants of Telesis to Premier America CU as part of a purchase and assumption agreement, in which the $1.3-billion credit union purchased the member accounts and healthy assets of Telesis and NCUA assumed an estimated $100 million of MBLs.
Telesis was one of the nation's biggest business lenders, sharing out tens of millions of MBLs as loan participations to credit unions all over the country. Many of those MBLs went sour over the past few years, embroiling Telesis in numerous business bankruptcy disputes in California, Oregon, Tennessee, Florida and other states, some of which will be inherited by NCUA.