The tug-of-war between ABS bondholders and Conseco Inc. picked up steam last week, insiders told ASR. While little to no progress was made during recent negotiations, pressure from the bankruptcy court judge, Carol Doyle, could lead to a resolution sooner than previously thought. Whatever the outcome, it will surely be a precedent setter for securitizations in servicer bankruptcy.
As previously reported, in the reorganization plan submitted as part of the Dec. 17 Chapter 11 bankruptcy filing, CFN Investment Holdings would acquire the Conseco Finance unit and take over the all of its servicing platforms. In order to make the servicing profitable for CFN, Conseco asks that fees be increased to 125 basis points from the current 50, removing 75 basis points from the excess spread cushion.