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Did the French-backed New York financiers Craig Cogut and Leon Black, buyers of bonds from the collapsed First Executive Corp. insurance empire, outsmart state Insurance Commissioner John Garamendi to the tune of $1 billion--thus depriving policyholders and others of their rightful bounty?
And is the Mutuelle Assurances Artisanale de France ready to score another $900 million killing, by buying Executive Life, the California life insurance subsidiary of First Executive?
And will Garamendi's plan to rehabilitate the insolvent Los Angeles-based Executive Life Insurance Co., now before the state Court of Appeals, be torn asunder by Judge Norman Epstein in a ruling expected no later than St. Patrick's Day?
The answer to all three questions, say some, is "yes."
But others say "stay tuned"--the Cogut-Black buyout is still in the embryonic stages profit-wise, while Garamendi's plans are basically fair and will likely survive judicial scrutiny.
In all, it's a billion-dollar brouhaha.
Bitter arguments have swirled around the Executive Life collapse, ever since founder Fred Carr stepped out his Wilshire Boulevard offices for the last time in April 1991. leaving First Executive Corp. bankrupt with ramifications for its California subsidiary Executive Life.
Nearly 400,000 Executive Life policyholders were left in the lerch in the biggest life insurance company crash in history.
Carr's insurance subsidiary had gorged itself on junk bonds. which plummeted in value in the late 1980s and early 1990s. By 1991, a policyholder run forced Commissioner Garamendi to seize the insurer.
The stocky, bushy-haired Black, 40, former executive at now-defunct brokerage house Drexel Burnham Lambert, popped up as key adviser to the French group Altus Finance, and offered $3.25 billion for $7.56 billion (face value) of Executive Life' s junk bond portfolio in October 1991, or about 43 cents on the dollar of face value. Cogut, a former lawyer for Drexel Burnham Lambert, also emerged as a lead adviser to Altus, an arm of the big French bank Credit Lyonnaiss.
(For whatever reason, Black and Altus have become linked in the media, although some insiders have said Cogut plays a lead role. In any event, the team is often referred to as Altus-Black.)
The Altus-Black deal was blessed by Garamendi and sanctioned by the court The $3.25 billion in cash went into Executive Life's coffers,...