M&T Bank in Buffalo, N.Y., warned that it could have some losses tied to the bankruptcy of Tricolor Holdings.
The company disclosed in a regulatory filing that unit Wilmington Trust could take a hit tied to litigation stemming from the bankruptcy and alleged fraud at Tricolor. M&T said it is unable to estimate its financial exposure, though it said the losses should be immaterial.
Tricolor, a subprime auto lender that packaged loans into asset-backed securitizations, filed for Chapter 7 bankruptcy last fall. Subsequent investigations alleged that about $683 million in fictitious loans were recorded. In December, the Department of Justice unsealed criminal charges against certain Tricolor executives, alleging they conspired to defraud lenders and ABS investors.
The Chapter 7 trustee has also filed civil actions against those executives.
Wilmington Trust and M&T Bank had no direct loan or loan commitment exposure to Tricolor. Since 2018, Wilmington Trust has served in various corporate custodian and trust roles across multiple Tricolor warehouse facilities and securitization transactions.
On Jan. 12, certain noteholders filed a civil complaint against Wilmington Trust alleging breaches of contract and fiduciary duty tied to those transactions. Wilmington Trust intends to vigorously defend itself.