NEW YORK (Reuters) - Advanta Corp , a small business credit card lender, on Sunday said it filed for bankruptcy protection after the economic crisis over the last two years devastated its small business customers.
Advanta Bank Corp, a wholly owned subsidiary of Advanta Corp which issues credit cards for small businesses, is not included in the Chapter 11 filing, the company said. The filing will not have any impact on outstanding credit card balances, Advanta said.
The Spring House, Pennsylvania-based company Advanta, which earlier this year shut 1 million accounts, said it is currently collecting its $2.7 billion portfolio of managed receivables from 360,000 customers, but the cards are not open to new charges.
It cautioned that Advanta Bank's capital is below regulatory capital requirements and over time Advanta Bank Corp may be turned over to an FDIC receivership.
It said the parent corporation has decided not to fund the capital deficiency in order to preserve value for the senior retail note holders and other Advanta Corp. stakeholders.
Advanta Corp said it has close to $100 million in cash and equivalents on hand, but over time it would not be able to meet all of its existing obligations. It has about $138 million of senior retail investment notes outstanding.
(Editing Bernard Orr)