The holders of around $6.5 billion in Conseco’s debt have reportedly submitted a plan which would restructure the Indiana-based insurance and finance company under their ownership.
According to reports appearing in both the Wall Street Journal and the Associated Press, the bondholders would take full ownership of Conseco in a controlled bankruptcy proceeding.
They apparently moved closer to that objective last week when Gary Wendt, who had been hired to try and turn the company around, stepped down as CEO, although he’ll remain as Chairman of the Board (See IJ Website, Oct. 3)
Other groups, including preferred and common shareholders would receive little if anything under the plan. The need to reach a solution is becoming more urgent by the day, however, as the prolonged discussions, which have been going on since August, have left the company in limbo, and are beginning to adversely affect its business activities.
A “prepackaged bankruptcy filing” with terms negotiated before a filing is submitted for a judge’s review, would begin Conseco’s rehabilitation, and protect its dwindling assets.
The bankruptcy would be the third biggest in U.S. history after WorldCom and Enron.
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