Affirmative Insurance opposes request to convert cases to Chapter 7

By Mark Reccek

Bethlehem, Pa., Jan. 15 – Affirmative Insurance Holdings, Inc. objected to the official committee of unsecured creditors’ request to convert the cases to Chapter 7 from Chapter 11, according to a Thursday filing with the U.S. Bankruptcy Court for the District of Delaware.

The company principally contends the committee's request argues the debtors are insolvent. According to the objection, the company argues it is not insolvent as it has access to $750,000 of cash.

Also, the company said the committee's motion was filed too early in the bankruptcy process.

“Conversion at this early stage, when the debtors are not administratively insolvent and are engaged in active plan negotiations, would not be in the best interests of creditors and the estates,” the objection added.

The company argues it should be permitted more time to conduct negotiations in order to propose a confirmable plan which maximizes value.

As previously reported, the committee said the estates are insolvent and the company has no business remaining to reorganize.

The committee further said converting the cases to Chapter 7 will permit an independent Chapter 7 trustee “to pursue and seek to monetize unliquidated and contingent assets for the benefit of the debtors’ creditors, including holders of the debtors’ approximately $100 million in unsecured debt.”

The committee also said converting the cases to Chapter 7 will prevent the debtors’ estates from accumulating more expenses related to a Chapter 11 case.

A hearing is scheduled for Jan. 19.

Affirmative Insurance is a Burr Ridge, Ill.-based producer and provider of personal non-standard automobile insurance policies to individual consumers. The Chapter 11 case number is 15-12136.

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