A judge has named Deerwood Bank winner of the bankruptcy auction for American Bank of St. Paul, in the first test of involuntary bankruptcy as a means of resolving trust-preferred debt.

The $250 million-asset Deerwood, Minn., lender bid $17 million for the $302 million-asset American Bank, according to court documents. Judge Katherine Constantine of the U.S. bankruptcy court for Minnesota approved Deerwood's bid on Tuesday, overruling an objection by University Financial Corp. of St. Paul, Minn.

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