Conseco mobile home finance

In the wake of mounting financial woes, Conseco Inc. has filed for Chapter 11 protection. Measured by assets, Conseco's bankruptcy would be the third largest in corporate history, trailing only WorldCom and Enron. But that figure is misleading because most of the assets are in insurance companies that did not seek protection from creditors, according to the New York Times.

Conseco Inc., the Indianapolis-based parent company of swimming pool underwriter Conseco Finance Group, a leading provider of swimming pool financing programs, announced the move Dec. 18, 2002. As part of the agreement, it will sell the St. Paul, Minn.-based Conseco Finance to CFN Investment Holdings, a group formed by private investment firms, it was noted in a company statement

According to The Business Journal, the sale price was equal to Conseco Finance's outstanding secured debt. The deal is scheduled to be completed in the first quarter of this year. Conseco Finance said it had an agreement with an affiliate of the buyer to provide up to $125 million in financing to continue operations while the company works its way through bankruptcy.

Although Conseco was a major provider of pool and spa financing programs, its bankruptcy protection filing shouldn't have a large impact on the industry, said Dick Dal Pino, owner of Dal Pino Quality Pools in New Castle, Calif., and chairman of the National Spa & Pool Institute's Builders Council.

"There's been some discussion that there would be a void there," he said, "but somebody will fill it. When the Money Store went out of business, they were a big player in the [pool] industry, and there was a brief fallout. But [financing] is a competitive industry and there will always be someone there to pick up the slack."

Dal Pino noted that the recent boom in home renovation and pool building isn't tied to lending companies anyway. "With the money market as inexpensive as it is, most people are just refinancing their homes and taking the equity out and hopefully buying a pool," he said. "So I don't think [Conseco's bankruptcy] will have a huge impact on the industry."

The filing does not include Conseco's insurance operations, which the company says remain financially sound.

Conseco Finance Group became insolvent after failing to make a $4.7 million payment that was due Dec. 4. The unit grew out of the parent company's costliest acquisition, the $6 billion purchase of Green Tree Financial Group in 1998. Conseco Finance, specializing in high-risk mobile home loans, in addition to pool financing programs, became a burden as loan default rates rose.