Harrington West Financial Group, Inc. has decided to file for Chapter 11 bankruptcy protection and liquidate its assets. The case was filed in the United States Bankruptcy Court, Central District of California, Northern Division. A plan for liquidation will be released in a few months.
Looking at the history of the stock, this event did not come as a surprise. HWFG has been on a downward slide for the last 3 months. Earlier this summer, an Entry of a Prompt Corrective Action Directive (“PCA Directive”) was announced. The PCA Directive outlines guidelines for reporting to the OTS on the status of the Bank’s capital raising efforts and sets forth certain required recapitalization mandates and additional business and operational restrictions. The PCA Directive basically stated that they must be adequately recapitalized or enter into a merger or acquisition with another institution.
The stock took a 25% dip to $0.15 over the next month as stockholder optimism waned. At the end of August a sudden dive occurred as the market was flooded with nearly 1 million shares over 2 days; a sure sign that investors were pulling out as they sensed the approaching filing. The stock is now just over a penny at $0.011.
Harrington West’s total assets as of the petition date were approximately $579,282, plus a potential tax refund of an unknown amount. Its total liabilities were approximately $26,004,000.
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