Colonial BancGroup files plan to distribute liquidation proceeds

By Caroline Salls

Pittsburgh, Dec. 10 - The Colonial BancGroup, Inc. filed a plan of liquidation and related disclosure statement Thursday with the U.S. Bankruptcy Court for the Middle District of Alabama.

The plan calls for the continued liquidation of the company's assets and the distribution of the liquidation proceeds.

Colonial said the ultimate return for creditors will depend on the success of the liquidation process, the successful pursuit of third-party claims and the resolution of disputed claims.

Treatment of creditors will include:

• Administrative claims, priority tax claims and priority non-tax claims will be paid in full in cash;

• Holders of some secured claims will either receive cash or the collateral securing their claims;

• The Alabama Revenue Department secured claim will be paid in full in cash over five years;

• Convenience class claims will be paid in full;

• Holders of general unsecured claims and indenture claims will receive a share of available cash after priority claims have been paid in full and payment is reserved for disputed claims; and

• Equity interests will be canceled, but holders will have the right to receive distributions after all other allowed claims are paid in full.

Colonial BancGroup is the Montgomery, Ala.-based holding company for Colonial Bank. The company filed for bankruptcy on Aug. 25, 2009. Its Chapter 11 case number is 09-32303.

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