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Affirmative Insurance Holdings Dismissal Sought

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Anne Melissa Dowling, acting director of insurance of the State of Illinois (not individually, but solely as the statutory and U.S. Bankruptcy Court-affirmed rehabilitator of Affirmative Insurance Company) filed with the Court a motion for an order dismissing the Debtors’ Chapter 11 cases, pursuant to Section 1112(b)(1) of the United States Bankruptcy Code.

The motion explains, “…[D]ismissal, not conversion, is the appropriate remedy under Section 1112(b): (a) the Debtors have no assets to reorganize or liquidate, except causes of action that were already being pursued prepetition or can be brought and pursued outside of bankruptcy post-dismissal; (b) the Debtors have no on-going business to preserve – the Debtors’ regulated insurance subsidiaries are all under the control of state regulatory agencies, and the agreement under which Debtors provided services to those subsidiaries has been terminated; (c) the Debtors only employee is an officer who has no business to run and no employees to supervise, and (d) administrative expenses of these estates appear to have ballooned to $1.4 million in just over four months, with no end in sight and no cash with which to pay them….Conversion to chapter 7 could trigger a chain of events that would prevent AIC from utilizing many of the existing $200 million of NOLs to offset its taxable income and reduce its tax liability in rehabilitation, for the benefit of its creditors and policy holders.”

The motion continues, “Conversion to chapter 7 would continue to delay the Rehabilitator from obtaining those funds and may give rise to a claim by the chapter 7 trustee (which AIC would dispute) for a statutory fee in connection with returning those funds to AIC. Finally, conversion would continue to delay the Rehabilitator in prosecuting the Complaint in Illinois Court. The parties to the Complaint are two non-Debtors, JCF and the Rehabilitator….Maintaining the Cases in bankruptcy would impose further costs on the Rehabilitator, in seeking to lift the automatic stay to proceed with the Complaint in Illinois Court.”

The rehabilitator also filed with the Court a motion to shorten consideration of the dismissal motion. Read more bankruptcy news.

The post Affirmative Insurance Holdings Dismissal Sought appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.


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