Colonial BancGroup tweaks stock, convenience claim plan treatment

By Caroline Salls

Pittsburgh, Feb. 2 - Colonial BancGroup, Inc. filed an amended plan of liquidation Wednesday with the U.S. Bankruptcy Court for the Middle District of Alabama to tweak proposed stockholder and convenience claim treatment.

Specifically, preferred stockholders will be paid in an amount equal to the greatest of the allowed amount of any fixed liquidation preference to which holders are entitled, any fixed redemption price to which they are entitled, or the value of the interests.

However, preferred stockholders will only be paid after all allowed unsecured claims and all statutorily subordinated claims are paid in full.

As a result, Colonial said it does not expect to make a payment on account of the preferred stock.

Under the original plan, preferred stockholders were not assigned their own plan class.

Also under the amended plan, common stockholders will receive no distribution. Under the previous plan, all stockholders were slated to receive any distribution available after all other claims were paid in full.

In addition, holders of convenience claims will recover 75%, compared with payment in full under the original plan.

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;

• Holders of convenience class claims will recover 75%;

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

• Holders of preferred stock will receive payment after all unsecured and statutorily subordinated claims are paid in full; and

• Equity interests will be canceled, and holders will receive no distribution.

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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