Reports Confirm 50/50 Split of Reliance Assets

May 14, 2003

According to reports from Dow Jones Newswires, the Pennsylvania Insurance Department and the creditors of the bankrupt Reliance Group have presented a proposed agreement to U.S. Bankruptcy Judge Arthur Gonzalez in New York to split the group’s remaining assets on an equal basis. (See IJ Website May 12)

The principal creditors, J.P. Morgan Chase and financier Carl Icahn, and the PID will drop competing lawsuits against one another and will initially share around $90 million, a lot less than the estimated $2 billion plus shortfall between Reliance’s assets and the amount of the insurance claims from its customers.

The claimants still intend to pursue legal actions against the Reliance Group’s former CEO Saul Steinberg and other company executives. According to the DJ report Pennsylvania would get 60 percent of any proceeds, if it funds the costs of the lawsuit, or 50 percent if all parties share the cost.

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