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TOPIC: NTBK - NetBank Inc. (PINK: 0.08 x 0.085)

NTBK - NetBank Inc. (PINK: 0.08 x 0.085) 10 years 1 month ago #1243

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[NTBK - NetBank Inc. (PINK: 0.08 x 0.085)]
Could be getting cash from future settlements:

SEC 8K Filing on 8/22/2007:

Item 8.01 Other Events.

NetBank (“NetBank, FSB”), a federally chartered savings bank and wholly-owned subsidiary of the Company, and Illinois Union Insurance Company (“Illinois Union”) entered into a Settlement Agreement, Mutual Release and Policy Rescission dated as of August 21, 2007, providing for the settlement of NetBank, FSB’s pending claims against Illinois Union and the payment of $19,250,000 to NetBank, FSB, subject to court approval of the settlement.

As reported in the Company’s previous filings with the Securities and Exchange Commission (the “SEC”), NetBank, FSB filed a complaint in January 2002 against Commercial Money Center, Inc. (“CMC”), Illinois Union, Safeco Insurance Company of America (“Safeco”), and Royal Indemnity Company (“Royal,” and together with Illinois Union and Safeco, collectively referred to as the “Sureties”). CMC was the originator and subservicer of various equipment leases (the “Leases”). NetBank, FSB purchased most of the payment streams generated by the subject Leases from CMC (the “Payment Streams”). The Sureties are insurance companies that issued surety bonds and insurance policies guaranteeing payment of the Payment Streams (the “Bonds”) and also served as master servicers of the Leases. The NetBank, FSB action against the Sureties alleges several claims, including claims for breach of contract, fraud and bad faith, and seeks, among other things, payment under and enforcement of the Bonds. The claims of NetBank, FSB against CMC, Safeco, and Royal remain pending.

The settlement amount represents approximately 98.6% of the unrecovered purchase price NetBank, FSB paid for the outstanding Payment Streams allocable to Illinois Union, approximately 73% of the outstanding Payment Streams allocable to Illinois Union, and approximately 38.5% of the estimated total damages (outstanding Payment Streams plus interest, attorneys fees and other consequential damages) that had been claimed against Illinois Union. The following chart shows, by Surety, the unrecovered purchase price NetBank, FSB paid for the outstanding Payment Streams, the Outstanding Payment Stream Amount, and the Estimated Total Damages (which includes outstanding Payment Streams, interest, attorneys fees, and other consequential damages).

As a result of ongoing financial and regulatory pressure, the Company believes that its outstanding common stock may have little or no value, notwithstanding NetBank, FSB’s settlement with Illinois Union and any potential recovery along the same lines with Safeco and Royal. Accordingly, investment in the Company’s common stock would be highly speculative.

8K Filing
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