Vesta Insurance creditors committee asks court to force cancellation of insurance policy extension

By Caroline Salls

Pittsburgh, Dec. 6 - Vesta Insurance Group, Inc.'s official committee of unsecured creditors asked the U.S. Bankruptcy Court for the Northern District of Alabama to force the company to cancel the extension of a management liability and company reimbursement insurance policy and order the return of the $1.25 million extension premium, according to a Tuesday court filing.

The policy in question is through XL Specialty Insurance Co.

According to the motion, the committee will be given court approval to assert and prosecute claims against current and former Vesta officers and directors, including claims covered by the policy.

The order will allow either the committee or, upon the effective date of the company's plan of reorganization, the plan trustee to assert the claims before Dec. 31.

Because the committee or the plan trustee will be able to assert the claims before Dec. 31, the committee said extending the policy to Dec. 31, 2007 is not necessary.

Vesta is a Birmingham, Ala., insurance company. Its involuntary Chapter 7 case was converted to a voluntary Chapter 11 case on Aug. 7. Its case number is 06-02517.

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