Reliance Considers Bankruptcy Protection

August 15, 2000

Reliance Group Holdings Inc. may seek bankruptcy protection in order to restructure its debt. The company, which is experiencing mounting losses will also operate its property and casualty insurance businesses as a run-off company, paying off claims and continuing to seek buyers for most of its insurance lines while not renewing other insurance lines.

Reliance recently posted a second-quarter net loss of $504.5 million, compared with a net loss of $156.9 million for the same period 1999. In addition, company shares have lost more than 85 percent of their value during the past two years. A proposed $293 million purchase of Reliance by Leucadia National Corp. fell through in July.

Reliance, with no financing in place, still faces repaying approximately $700 million in debt over the next three years. Saul Steinberg, who owns 42 percent of the 183-year-old Reliance, stepped down as chief executive in February and has been looking to sell the company since last November.

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