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Liquidated CU drops injunction quest hearing delayed
WASHINGTON (8/19/10)--The now-liquidated Kappa Alpha Psi FCU, which went to court seeking an injunction against the National Credit Union Administration (NCUA) to stop the liquidation, said Wednesday it will drop the injunction request. The statement was made during a status hearing in the U.S. District Court for District of Columbia in Washington Wednesday morning. Attorneys for the Texas-based credit union said it no longer seeks an injunction because of a court order issued Aug. 11 requiring NCUA to show cause for the liquidation. Also at Wednesday's hearing, NCUA and the credit union agreed to extend the time for briefing and the hearing on the order to show cause. The court vacated the briefing schedule. Instead, NCUA must file its renewed response to the show-cause order by Aug. 30, the credit union must file its reply to the government's response by Sept. 15, and NCUA must file its sur-reply by Sept. 22. U.S. District Judge Emmet G. Sullivan set a hearing on the order to show cause for Oct. 15 at 11 a.m. ET. NCUA ordered the liquidation of the $750,000 asset credit union on Aug. 3 and formally carried out the liquidation orders Friday by distributing all shares to members (News Now Aug. 18). Earlier this month, the credit union challenged the liquidation, claiming it was unjust and that its net worth ratio was affected by "full accrual accounting" and NCUA's assessments related to the Temporary Corporate Credit Union Stabilization Fund. NCUA countered that the liquidation was the result of the credit union's inability to generate consistent operational profits, build its net worth position, maintain its records in a sound manner, grant quality loans, and adequately collect on delinquent loans.


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