Colonial BancGroup statement approved; plan hearing set for May 11

By Caroline Salls

Pittsburgh, Feb. 23 - Colonial BancGroup, Inc. received court approval of the disclosure statement for its amended plan of liquidation, according to a Feb. 23 filing with the U.S. Bankruptcy Court for the Middle District of Alabama.

The plan confirmation hearing is scheduled for May 11.

Under the plan, a trustee will continue to liquidate the company's assets and will distribute proceeds to creditors.

Creditors will be treated as follows:

• 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 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.

These creditors will be paid 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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