Lansing, MI – Capitol Bancorp Ltd., a holding company with banks throughout Michigan has been struggling financially for years. In an attempt to keep the company above water, it is voluntarily restructuring the company while it prepares for the possibility of bankruptcy.
In recent years the struggling company has been selling off banks while merging others. Today, it has a total of 15 affiliate banks in 10 states across the U.S. Capitol Bancorp's Michigan holdings include the Bank of Michigan in Farmington Hills, Capitol National Bank located in Lansing and Okemos, and Michigan Commerce Bank, with branch locations in Ann Arbor, Auburn Hills, Brighton, Detroit, Farmington Hills, Grand Haven, Grand Rapids, Holland, Muskegon and Portage.
As Capitol Bancorp prepares shareholders for the possibility of an upcoming Chapter 11 bankruptcy plan, it has asked its debt holders to consider exchanging their debt securities for shares of preferred and common stock. The company's officials claim to be optimistic about the exchange option; however, they stressed that neither the operations nor the deposits of its affiliate banks would be affected by the restructuring plan or the potential bankruptcy filing.
According to company documents filed with the U.S. Securities Exchange Commission, a number of the subsidiary banks are dangerously close to being seized by the Federal Deposit Insurance Corp. due to the fact that they are barely meeting the requirements for capital ratios. By the end of the first quarter in March, Capitol Bancorp lost $7.9 million, the equivalent of 19 cents per a share. The company has reported quarterly losses for all but one quarter for the last three and a half years.
The Detroit area has endured sky high unemployment rates in recent years, so it's no wonder that local banks would be adversely affected by the economic downturn as well. If you are facing overwhelming debt, then we urge you to contact a Detroit bankruptcy attorney from The Law Offices of Marshall D. Schultz as soon as possible.