(RTTNews) - Sunday, Advanta Corp. (ADVNB: News ,ADVNA: News ), an issuer of credit cards for small business, said it filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code, hurt by the economic debacle that devastated its small business customers.

The Spring House, Pennsylvania-based company said Advanta Bank Corp., a wholly owned subsidiary of Advanta Corp, is not included in the Chapter 11 filing and the proceeding will not have any impact on outstanding credit card balances.

The company said Advanta Bank Corp.'s capital is below regulatory capital requirements and over time Advanta Bank Corp. may be turned over to an FDIC receivership.

Advanta Corp. is currently collecting its $2.7 billion portfolio of managed receivables from 360 thousands customers but the cards are not open to new charges.

Advanta Corp. said though it has close to $100 million in cash and equivalents on hand, 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
The company said it has decided not to fund the capital deficiency in order to preserve value for the senior retail note holders and other Advanta Corp. stakeholders.

In May this year Advanta Corp. and Advanta Bank Corp. initiated a plan to acquire Class A bonds issued by the Advanta Business Card Master Trust. However, the FDIC, after initially clearing the Plan, ultimately decided not to allow it to proceed.

After that Advanta Bank Corp. proposed a second plan to enable the Company to preserve value for its stakeholders and provide capital both for the Company and the Bank. However, an essential component of that plan recently also failed to secure FDIC approval leading to the Chapter 11 filing.

ADVNA rose $0.01 or 1.54% and closed Friday's regular trading at $0.33. ADVNB declined $0.03 or 8.82% and closed at $0.31.

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by RTT Staff Writer

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