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BONDHOLDERS WIN BIG IN COURT OF APPEAL: COURT UPHOLDS POLICYHOLDER PRIORITY STATUS FOR GICs IN EXECUTIVE LIFE INSURANCE REHABILITATION PLAN

 SAN FRANCISCO, Nov. 30 ~PRNewswire~ -- The following was released by Thelen, Marrin, Johnson & Bridges today:
 With more than $2 billion at stake for bondholders across the United States, the California Court of Appeal today upheld a trial court's decision that guaranteed investment contracts (GICs) issued by the now defunct Executive Life Insurance Co. will be accorded the same priority as all other insurance products issued by Executive Life. The ruling insures that bondholders will receive a significant recovery under Executive Life Insurance Co.'s rehabilitation plan approved by Judge Kurt J. Lewin in the Los Angeles County Superior Court.
 "We are very pleased with the outcome and the decisive opinion by the Court of Appeal. We never doubted that the GICs would be found to be insurance annuities," said Gary Fontana, a partner in the law firm of Thelen, Marrin, Johnson & Bridges and lead attorney for Texas Commerce Bank -- El Paso, NA, the indenture trustee which filed the original lawsuit challenging California Insurance Commissioner John Garamendi's denial of policyholder status for the $200 million GIC it purchased from Executive Life in 1986.
 "It is the right decision. Two courts have now clearly refuted the arguments put forth by Garamendi and others that individual and corporate claimants should be treated differently in the rehabilitation process. The Court of Appeal has simply ruled in effect that the Commissioner and the insurance community as a whole must honor the contracts that were understood by all to be insurance products at the time they were issued. This is the first major ruling specifically confirming the status of municipal GICs as insurance contracts," Fontana said.
 The collapse of the Executive Life Insurance Co. is the second largest insurance insolvency in U.S. history and is mainly attributed to the temporary collapse of the junk bond market in the early 1990s and the failure of insurance regulators to stop the resulting run on the company by nervous policyholders. Executive Life was finally placed into conservatorship by Garamendi in April 1991. As part of his rehabilitation plan, Garamendi distinguished between muni-GIC contracts issued to corporate trustees and other types of annuities issued primarily to individuals. He sought to use the $2 billion in assets Executive Life received for GICs issued between 1986 and 1989 to make up losses to other policyholders. Texas Commerce Bank filed its complaint on May 16, 1991, and was later joined by the seven other indenture trustees advancing similar claims. Judge Lewin ruled on Nov. 15, 1991, that the GIC bondholders were to be considered in the same class as all other policyholders for the purposes of the rehabilitation plan. Commissioner Garamendi appealed the decision.
 "This is an important victory for Texas Commerce Bank and for thousands of individual bondholders whose investments are tied to the GICs," noted Fontana. "The trustees have been treated as second-class participants in the rehabilitation process from the outset -- from the denial of restitution rights to a two-tier approach to the valuation of their policies. The court has accorded them their due status."
 Fontana recently filed a writ of mandate on behalf of Texas Commerce Bank seeking to reverse certain provisions of the rehabilitation plan of Executive Life which will result in the sale of its assets to a French investor group. The writ will be argued before the Second Appellate District Court of Appeal in Los Angeles on Dec. 9, 1992.
 Thelen, Marrin, Johnson & Bridges is a national law firm with 225 attorneys in eight offices -- San Francisco, Los Angeles, New York, Washington D.C., Houston, San Jose, Calif., Orange County, Calif., and Hong Kong.
 -0- 11~30~92
 ~CONTACT: Gary Fontana, 213-229-2056, or 415-392-6320, or Ron Lopez, 415-955-3547, or Christine Franklin, 213-229-2043, all of Thelen, Marrin, Johnson & Bridges~


CO: Thelen, Marrin, Johnson & Bridges; Executive Life Insurance Co.;
 Texas Commerce Bank ST: California, Texas IN: INS SU:


GT-SG -- SF012 -- 2163 11~30~92 21:09 EST
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Date:Nov 30, 1992
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