Conseco's bank debt has been trading above the 96 range as the company winds up its bankruptcy proceedings. One trader explained that there is increased interest in the name as investors bet on the chance that the preferred convertible equity portion of the bank debt holders' recovery will be refinanced before holders have the option to convert to common stock. The company has about $1.5 billion of claims under its pre-petition credit facility. Bank of America is the administration agent on the deal.
The bankruptcy court is currently conducting a confirmation hearing to approve Conseco's plan of reorganization and disclosure statement. A company spokesman said that one of the primary issues discussed at the hearings is the appropriate valuation assigned to the company. Holders of the company's trust originated preferred securities allege that the company is worth more than the amount that has currently been assigned. The trust preferred securities holders will not receive any recovery under the current plan of reorganization. The spokesman expects that the bankruptcy judge will make a ruling on the matter, but said it is unclear when that ruling will come.