In 1989 and the early 1990s, Sills Cummis represented the Resolution Trust Corporation (RTC) as the receiver of more than a dozen defendant savings and loans in New Jersey. Sills Cummis was one of the RTC’s go-to firms in the northeast handling multiple files on its behalf. Many of the actions involved either real estate development projects for which the financial institutions loaned money to finance or other complex litigation matters related to the closing of the savings and loans in New Jersey. In particular, the Firm represented the RTC as the receiver of the then largest savings and loan in New Jersey, including representation in connection with a 1,690-unit luxury apartment development in Jersey City, NJ. By the mid-90s, the RTC’s functions and Sills Cummis’ role on its behalf had ceased and the savings and loan industry and its assets were on sound footing.
The U.S. Congress enacted the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) in response to the savings and loan crisis of the 1980s, which resulted in approximately one-third of all savings and loan institutions, also known as thrifts, failing within a 10-year span.
FIRREA was a broad remedial statute aimed at resolving the “monumental problems involved with the unprecedented costs” of that crisis. The Resolution Trust Corporation (RTC) was created under FIRREA. RTC is a now-defunct federal agency that was in existence from 1989 to 1995, with the goal of maximizing the net present value of the assets left behind as insolvent thrifts were sold or closed while minimizing the effect of the related transactions on the local real estate and financial markets.
Upon its creation in 1989, the RTC inherited 262 failed thrifts from the Federal Deposit Insurance Corporation (FDIC). By year-end 1995, the RTC resolved cases involving 747 thrifts, with total assets of $394 billion.