Beleaguered insurance giant First Executive bowed to the inevitable on May 13 and filed for Chapter 11 bankruptcy protection in federal court in Los Angeles. The junk-bond-laden company, built by Chairman Fred Carr into a behemoth with $13 billion in assets, has been on the ropes since California regulators seized its Executive Life Insurance unit on Apr. 11. New York regulators soon followed suit with the company's subsidiary there. Starved of payments from the subsidiaries, First Executive quickly ran short of cash.
Because regulators have taken over the insurance units, they are shielded from the bankruptcy action. California insurance commissioner John Garamend said on May 14 that he's planning to sell the California insurer as a "true fixer-upper." French investors led by Altus Finance are offering to commit $3 billion.