The borrower, a bank, received word from the Office of the Comptroller of the Currency (the agency) that it needed an injection of $3.5 to $4.5 million dollars to prevent the borrower’s closure. The borrower’s owners agreed for a lender to inject the necessary funds, and in exchange, the borrower would assign certain classified loans and written off overdrafts to the lender. Both parties executed Loan Purchase and Assignment and Assumption of Loan documents. A month later, the borrower failed, and the court appointed a receiver. The receiver contacted the lender and indicated that the receiver paid some funds toward the lender’s assigned loans and overdrafts. The lender then demanded payment of those funds in a claim. The receiver disallowed the claim under 12 U.S.C. § 1821(d)(5)(D)(i). The lender then alleged that the receiver already tendered some payments under the loans and written off overdrafts. The lender filed suit, objecting to the receiver’s disallowance of its claim. The United States of America requested to intervene under Rule 24 of the Federal Rules of Civil Procedure, which neither party opposed. However, the lender opposed the government’s motion to stay proceedings for a pending criminal case related to the borrower’s failure.
In FDS Fin., LLC v. FDIC, No. CIV-25-1123-R, 2025 WL 3565345, 2025 U.S. Dist. LEXIS 257505, (W.D. Okla. Dec. 12, 2025) (opinion not yet released for publication), the court partially granted the government’s motion to intervene and stay. In determining whether a stay is appropriate, courts must balance six factors: “(1) the extent to which issues in the criminal case overlap with those presented in the civil case”; “(2) the status of the criminal case”; “(3) the private interests of the plaintiff in proceeding expeditiously versus the prejudice to plaintiff caused by the delay; (4) the private interests of, and burden on, the defendant; (5) the interests of the [c]ourt; and (6) the public’s interest.” Obispo v Ishkiret’s Grp., LLC, No. CIV-24-889-D, 2024 WL 5056643 at *3, 2024 U.S. Dist. LEXIS 223080 (W.D. Okla. Dec. 10, 2024). The government argued under the first factor that a significant overlap existed between the civil matter involving the borrower’s failure and the criminal investigation into the borrower’s failure. Under the second factor, the government also indicated that it had filed an indictment against the borrower’s former CEO, and more indictments could follow. Under the third factor, the lender argued that a stay would delay or frustrate its ability to collect on the loans and overdrafts, which it needed to begin the process of repaying the loan it gave to the borrower. The lender also argued it needed the loan documents, which the receiver refused to provide, and without these documents, the lender could be prohibited from collecting the loans and overdrafts before the relevant limitations periods expired. The court concluded that this factor favored the lender. Under the fourth factor, the receiver did not oppose the stay by the government; however, the lender argued that the risk of prejudice against itself outweighed the receiver’s risk of prejudice. Courts have recognized that a plaintiff’s prejudice can outweigh the defendant’s when the defendant is forced to choose between fulfilling civil discovery or asserting his Fifth Amendment privilege. See Obispo at *4. However, the court noted the receiver was not a criminal defendant in any proceeding. Finally, factors five and six address the interests of the court and the public, respectively. The court holds a strong interest in efficient litigation, but the court noted that it must consider that the resolution of the criminal case could increase the possibility of a settlement and affect the scope of discovery in the civil case. The public interest focuses on the government’s stake in obtaining a stay. In re CFS-Related Secs. Fraud Litig., 256 F. Supp. 2d 1227, 1242 (N.D. Okla. Mar. 10, 2003). The government argued that it had a strong interest in protecting the integrity of the criminal proceeding and in preventing the civil discovery process from influencing the evidence of the criminal case. The court concluded that only the third factor tilted slightly in favor of the lender and prepared to tailor the stay accordingly. At oral arguments, the lender stated that it would not object to the stay if the court allowed it to move for a Request for Production of loan and overdraft documents held by the receiver, with the promise of the lender’s cooperation in the government’s investigation. The court allowed the request and otherwise granted the motion to stay.
By Olivia Lewis [email protected]
Edited By Andrew Fielden [email protected]
Edited By Taylor O’Brien [email protected]