Temple-Inland (TIN) Sued Over Failure of Guaranty Financial; Shares Down 18%
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Temple-Inland (NYSE: TIN) shares are getting slammed Tuesday following reports the company may face litigation following the failure of Guaranty Financial Group, Inc. (OTC: GFGFQ).
According to rumors, court-appointed trustee Kenneth Tepper, representing Guaranty's creditors and the FDIC, is seeking more than $1 billion in damages.
The suit alleges Temple-Inland, the previous parent company of Guaranty, "loaded" the failed institution with toxic securities (infamous triple-A rated MBSs) and took $600 million in dividends.
Temple-Inland, in a statement Tuesday, said it believes the suit has no merit and will "vigorously" defend itself.
With $13 billion in assets and 162 branches, Guaranty was the fifth-largest failure of the financial crisis in 2008-09.
Though the FDIC is not directly involved in the suit, it will be able to collect on any proceeds gained as the result. Its estimated the FDIC lost $3 billion in the collapse of Guaranty.
Tepper is being represented by law firm Duane Morris LLP in Cherry Hill, N.J.
Temple-Inland shares are 18.2 percent lower to around $20.30 Tuesday afternoon.
According to rumors, court-appointed trustee Kenneth Tepper, representing Guaranty's creditors and the FDIC, is seeking more than $1 billion in damages.
The suit alleges Temple-Inland, the previous parent company of Guaranty, "loaded" the failed institution with toxic securities (infamous triple-A rated MBSs) and took $600 million in dividends.
Temple-Inland, in a statement Tuesday, said it believes the suit has no merit and will "vigorously" defend itself.
With $13 billion in assets and 162 branches, Guaranty was the fifth-largest failure of the financial crisis in 2008-09.
Though the FDIC is not directly involved in the suit, it will be able to collect on any proceeds gained as the result. Its estimated the FDIC lost $3 billion in the collapse of Guaranty.
Tepper is being represented by law firm Duane Morris LLP in Cherry Hill, N.J.
Temple-Inland shares are 18.2 percent lower to around $20.30 Tuesday afternoon.
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