Old Court S&L; Put in Receivership : Interest Payments on Deposits Halted at Maryland Thrift

BALTIMORE — A judge placed the troubled Old Court Savings & Loan in receivership Friday, saying he saw no chance of it “rising from the ashes,” and halted nearly all interest payments on $544 million in frozen deposits.

Under Circuit Judge Joseph H. H. Kaplan’s order, depositors will be entitled to all interest accrued as of Friday. Certificates of deposits also matured immediately, with no penalty for early expiration.

Old Court’s troubles in May touched off a crisis in the state’s thrift industry that could wipe out all the money in an S&L; insurance fund and cost taxpayers as much as $90 million.

Kaplan named the Maryland Deposit Insurance Fund as receiver.

The fund, set up to insure accounts at the state’s formerly privately insured thrifts, will be responsible for liquidating Old Court’s assets and developing a plan to return funds to depositors.

“I find it impossible to return management to the former board of directors or a new board of directors,” Kaplan said. “There is no alternative but to the appointment of a receiver for Old Court.”

Deposits have been frozen at the Baltimore-based S&L; since May, when it was placed in conservatorship, giving the state control of its day-to-day operations. Conservatorship was due to expire next Wednesday.

Thirty-five of the state’s 102 S&Ls; that were formerly privately insured have received federal insurance since Maryland’s thrift crisis began. But more than $1 billion in deposits are frozen at Old Court and two other S&Ls;, and withdrawal restrictions remain in place at 13 smaller thrifts.

Losses at Old Court are estimated at $175 million. Much of those losses are expected to come from financing of real estate ventures in which there was inadequate, incomplete and missing documentation, properties were overappraised and big fees were “bled” from the transactions, attorneys for the state said.

Kaplan gave Old Court owner Jeffrey Levitt, accused of misusing the thrift’s funds for his own personal gain, until Tuesday to propose a less drastic plan than receivership.