Metropolitan Mortgage files plan of reorganization, unsecured creditors may get up to $0.37 on the dollar

By Caroline Salls

Pittsburgh, June 23 - Metropolitan Mortgage & Securities Co., Inc. filed its amended plan of reorganization and related disclosure statement Wednesday with the U.S. Bankruptcy Court for the Eastern District of Washington, under which holders of general unsecured claims will receive up to $0.37 per $1 of claims from the sale of the company's remaining core assets.

According to the filing, because the company is insolvent and is no longer managing its insurance companies, the plan does not provide for any continuing business operations, but instead focuses on maximizing distributions to creditors through the efficient liquidation of all remaining assets as promptly as possible.

Also, because the $470 million owing on the company's debt securities far exceeds the total value of its combined remaining assets, the main focus of the plan is to maximize the percentage recovery of debt security holders and other unsecured creditors from the limited pool of remaining assets, the filing said.

Metropolitan's debt securities include debentures, investment certificates, preferred stock and common stock.

According to the plan, the company expects to liquidate its core assets, with an estimated $68 million in proceeds to be distributed to general unsecured creditors, before or shortly after plan confirmation.

The assets to be liquidated include the remaining core assets from Metropolitan's business operations, including its loan portfolio, real estate assets and investments; the company's indirect ownership interests in its insurance companies and its interests in claims or causes of actions based on alleged errors and omissions of its former directors and officers.

Creditor treatments

According to the plan, after payment of secured claims, priority claims, including taxes and employee wage and benefit claims, and administrative expenses, only some unsecured creditors will receive distributions.

The holders of equity securities will have their securities canceled and will receive no distributions under the plan or will receive interests in the creditors' trusts.

On the plan effective date, all of the assets of Metropolitan will be invested in the Metropolitan Creditors' Trust, which will own or control the remaining assets, will be responsible for the sale or liquidation of the assets and will determine and make distributions.

Beneficiaries of the trust may receive up to $0.19 for every dollar of their claims from the proceeds of the sale of the Metropolitan core assets and may receive an additional $0.15 to $0.18 from policy recovery, avoidance actions and the sale of the insurance companies.

Treatment of creditors under the plan will include:

*Holders of $121,000 in employee claims will receive 100% recovery in cash;

*Holders of $13.4 million in secured claims may receive payment in full of their claim or proceeds from the sale of the property securing the claim or the property securing the claim; and

*Holders of $357.25 million in general unsecured claims will receive a beneficial interest in the creditors' trust.

The plan administrator will act as trustee and will be the sole administrator of the company after confirmation of the plan.

Spokane, Wash.-based Metropolitan filed for bankruptcy on Feb. 4, 2004. Its Chapter 11 case number is 04-00757.

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