A federal court judge has dismissed a lawsuit that sought more than $570 million from three executives of Irwin Financial Corp., which federal regulators raided and closed three years ago.
Susan Cahoon, attorney for plaintiff Elliott Levin, the trustee assigned to the Irwin Financial bankruptcy, has promised an appeal within 30 days.
A judgment filed Sept. 27 in U.S. District Court for the Southern District of Indiana shows Judge Sarah Evans Barker dismissed all claims against former Irwin Financial executives Will Miller, Greg Ehlinger and Tom Washburn under the premise that the only party with the right to sue was the Federal Deposit Insurance Corp.
That entity never did so, and the statute of limitations expired in mid-September.
Levin, whose job is to try to recover assets for the holding company’s creditors, had charged in his lawsuit that the executives pursued risky loans, did not fully understand the risks and failed to inform the Irwin Financial board of directors of those risks.
The defendants and their attorney, Jim Knauer of Indianapolis, could not be reached Tuesday for a reaction to the judge’s ruling.
Barker agreed with the defense that Irwin Financial Corp.’s need to preserve capital did not become apparent until after the banks failed, “not when the executives authorized the dividends and stock repurchases.”
Knauer had maintained in a previous Republic story that the executives could not be held liable for business decisions that are now being judged in hindsight.
Columbus-based Irwin Financial Corp., parent company of Irwin Union Bank, lost more than $450 million in the six quarters before it failed and was taken over by federal regulators.
The corporation failed in part because borrowers struggled to repay loans, particularly high-risk home equity loans and mortgage loans in Western markets affected by the recession.
The company’s collapse wiped out shareholder value of roughly $1 billion.
June 25, 2009
Irwin Financial Corp. shares plunge nearly 23 percent, closing at an all-time low of 51 cents
July 28, 2009
Federal regulators warn Irwin Financial Corp.’s thrift bank to improve its capital position by Aug. 31.
Sept. 18, 2009
State regulators take over all 27 Irwin Union Bank branches, reopening under the First Financial Corp. banner.
Sept. 16, 2011
Lawsuit filed in U.S. District Court seeks more than $570 million from Irwin Financial Corp.
Dec. 17, 2011
Former Irwin Financial Corp. executives file a motion to dismiss the case in U.S. District Court.
Sept. 27, 2012
Judge Sarah Evans Barker dismisses the lawsuit.