Ashton J. Ryan Jr., former president and CEO of First NBC Bank, participates in the Nasdaq Exchange's May 10, 2013, debut of the bank's stock in public trading.

PHOTO PROVIDED BY NASDAQ

First NBC Bank founder and former president Ashton Ryan Jr. has asked a federal bankruptcy judge to let him begin collecting from insurance policies long held by the failed bank to cover mounting legal costs tied to his role there.

The bank was seized by the government in April. Well before then, the bank had taken out five insurance policies aimed at protecting Ryan from personal liability, according to a recent legal filing in federal court in New Orleans.

In addition to a $15 million primary insurance policy held by Zurich American Insurance Co., Ryan had taken out four policies that provide up to $45 million in additional coverage, according to his filing.

Amid concerns about First NBC's accounting practices and capital levels, federal and state regulators closed the New Orleans institution on April 28 in a $1 billion cleanup that marked the costliest failure of an American bank since 2010.

Two weeks later, parent company First NBC Bank Holding Co. filed for Chapter 11 bankruptcy protection.

Ryan's motion, filed Friday, is asking a judge to allow him to tap insurance proceeds to cover his legal bills and other costs.

In his court filing, Ryan's attorney, Alysson Mills of the New Orleans law firm Fishman Haygood, wrote that Ryan had "already incurred attorneys’ fees and costs and will continue to incur significant attorneys’ fees and costs in defense."

The case is being heard by U.S. Bankruptcy Court Judge Elizabeth Magner.

Zurich has indicated that it will not advance Ryan's insurance proceeds without a court order, according to his legal filing.

Among his potential legal hurdles, Ryan's filing cites a 2015 lawsuit filed by Georgia Insurance Commissioner Ralph Hudgens that lists Ryan as a defendant.

The episode, which The Advocate reported about last month, describes allegations against Ryan that portrayed aggressive and risky loan-making that he and the bank engaged in, according to banking industry experts.

Hudgens' lawsuit accused Ryan of "negligence for their continued, systematic and reckless financing," in part after First NBC repeatedly made loans to the owner of a Georgia auto insurance company in 2007 as the company teetered toward financial disaster. In early 2013, Southern Casualty Insurance Co. was declared insolvent. Ryan has said Hudgens' allegations are "baseless."

In December, Ryan was removed as First NBC's CEO but remained as president of the bank and its parent company until he resigned in April.

Meanwhile, insurance policies such as Ryan's are likely to become a focus of federal auditors, who continue to probe for clues as to why the New Orleans-based community bank's loan portfolio and tax-credit investments took heavy losses in its final months.

The Federal Deposit Insurance Corp., a U.S. banking regulator that protects bank customers in the event of failure, was named the bank's receiver when it was declared insolvent April 28.

In some cases, the FDIC pursues litigation against bank officers and directors to recoup damages, typically alleging they were negligent or failed in their fiduciary duty in overseeing some key area of the bank's business. The FDIC's decision on whether to pursue such a lawsuit typically comes after an investigation that can take as long as 18 months, experts say.

Follow Richard Thompson on Twitter, @rthompsonMSY.