On December 28, the U.S. Court of Appeals for the Fourth Circuit affirmed a district court holding that a bankruptcy trustee lacked standing to sue former directors of an insolvent bank holding company for alleged mismanagement of a failed subsidiary bank. In re Beach First Nat’l Bancshares, Inc., No. 11-2019, 2012 WL 6720911 (4th Cir. Jan. 2, 2013). The district court determined previously that the directors and officers of the holding company and the subsidiary bank were one and the same, and that the harm caused to the bankrupt holding company was the direct result of the failure of the subsidiary bank. As such, the district court held that the trustee’s claims on behalf of the holding company are derivative claims that can only be pursued by the FDIC as receiver for the failed subsidiary. On appeal, the trustee argued that the claims are direct, not derivative, claims that fall outside of the FDIC’s purview, and, in the alterative, the claims are proper even if derivative because the FDIC has declined to act. The appeals court agreed with the district court and held that the trustee pled mainly claims deriving from defalcations at the subsidiary bank level, and not a distinct and separate harm specific to the holding company. Further, the appeals court held that the FDIC retains its statutory authority to act, and, in any event, has no statutory authority to transfer to another party its right to act on behalf of the failed subsidiary. The appeals court reversed the district court with regard to one of the trustee’s claims, holding that the trustee’s claim that the directors caused the holding company to improperly subordinate its equity interest in a company that owned real property could proceed on remand as a direct claim against the directors because the alleged actions caused damages unique to the holding company.