PMI seeks approval of settlement with mortgage insurance subsidiary

By Jim Witters

Wilmington, Del., Nov 19 - PMI Group, Inc. and its official committee of unsecured creditors are seeking approval of a settlement with PMI Group subsidiary PMI Mortgage Insurance Co. and its receiver in connection with disputes surrounding economic issues, according to documents filed Nov. 19 with the U.S. Bankruptcy Court for the District of Delaware.

"The settlement ... would resolve a multitude of complex and challenging issues between the debtor and MIC, its principal regulated subsidiary," the motion states.

Settlement terms

Under the proposed agreement,

• The debtor will receive $20 million from MIC for $1 billion in net operating loss carryforwards and retain $1.2 billion in net operating loss carryforwards;

• The debtor's interest in its reinsurance subsidiaries will result in $32 million being retained for the benefit of the debtor's estate; and

• The debtor will terminate the pension plan it sponsors, indirectly resolving the claims filed against the estate by the Pension Benefit Guaranty Corp. The termination includes a lump-sum payment to each plan participant or the purchase of an annuity for a participant by the pension plan trust before Dec. 31.

By resolving the issues through the settlement, PMI will avoid protracted litigation and "improve the likelihood of achieving a consensual Chapter 11 plan and an expeditious conclusion" to the Chapter 11 case, the motion states.

A hearing on the proposed settlement is scheduled for noon ET on Nov. 28.

PMI is a Walnut Creek, Calif.-based provider of residential mortgage insurance and credit enhancement products. The company filed for bankruptcy on Nov. 23, 2011 under Chapter 11 case number 11-13730.

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