NetBank says to liquidate in bankruptcy

NEW YORK Mon Nov 26, 2007 12:44pm EST

NEW YORK (Reuters) - NetBank Inc NTBKQ.PK, which became the largest U.S. bank to fail in 14 years when it filed for bankruptcy protection two months ago, said on Monday it expects to liquidate its assets.

In a regulatory filing, the Internet bank said it intends to file a Chapter 11 reorganization plan that will "describe the liquidation of assets." It said it expects shareholders will receive nothing for their holdings.

NetBank, based in Alpharetta, Georgia, filed for protection from creditors on September 28 with the U.S. bankruptcy court in Jacksonville, Florida, after losses had mounted from mortgage defaults and what the U.S. Office of Thrift Supervision called "failed business strategies."

The Federal Deposit Insurance Corp closed NetBank's operations, and ING Groep NV's (ING.AS) ING Bank unit took over much of the company's deposits.

NetBank had had $2.5 billion of assets and $2.3 billion of deposits as of June 30, the FDIC said.

It was the largest U.S. bank to fail since 1993, when Western Federal Savings and Loan, a unit of WestFed Holdings Inc of Marina Del Rey, California, went into receivership.

NetBank shares traded Monday afternoon essentially unchanged at 1 cent on the Pink Sheets.

(Reporting by Jonathan Stempel; Editing by Tim Dobbyn)

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