Credit Union Service Organization Reaches Global Resolution in ITT Chapter 7 Bankruptcy

A credit union service organization (CUSO) of seven independent credit unions negotiated a global resolution with the trustee of ITT, the Consumer Financial Protection Bureau (CFPB) and many states’ attorneys general in ITT’s Chapter 7 bankruptcy case. Richard Bernard represented the CUSO, which had funded one of ITT’s private student loan programs prior to the bankruptcy, in the matter. The ITT trustee had sued the CUSO for approximately $250 million in clawbacks, disallowance of liens, and disallowance of claims. Pursuant to the resolution with the ITT trustee, the CUSO and the ITT trustee split a $10 million cash collateral account, the CUSO was allowed a general unsecured claim in the amount of approximately $125 million, and the CUSO received third-party releases, and pursuant to the settlements with the CFPB and the states’ attorneys general, the CUSO agreed to cease collections of approximately $168 million of ITT student loans.