The change comes after Conseco was released as a defendant in any of the investor and employee lawsuits per the company’s Chapter 11 bankruptcy reorganization. However, the plaintiffs’ attorneys have been preparing broadened lawsuits in recent weeks after the stay on lawsuits triggered by the company’s bankruptcy expired October 15, according to an Indianapolis Business Journal report.
Previously, eight lawsuits were filed against executives of the company alleging securities fraud when Conseco’s top brass continued to paint a rosy picture of the company’s finances while Conseco was headed toward bankruptcy. There was also a suit filed on behalf of 401(k) participants that alleged company executives breached their fiduciary duty by failing to disclose the extent of the financial problems and continuing to allow them to load up on Conseco shares (See Conseco Will Match 401(k) With Cash ).
Now attorneys are reviving the litigation, which
was consolidated into a single case this spring, and say
they hope to file the updated suit by the end of the
week. Attorneys in the 401(k) litigation hope to file an
amended suit by the end of this month, according to the
Additionally, attorneys said they would go after the personal assets of Conseco executives, even though insiders who were still with the company when it sought bankruptcy protection received broad releases from legal liability in the reorganization. However, the attorneys reviving the litigation say the releases do not shield insiders from claims by common stockholders and 401(k) plan participants, since those groups received nothing under the reorganization plan and were deemed by the court to have rejected it.
Successful litigation likely would recoup only a fraction of losses. Conseco shares, collectively worth nearly $7 billion in May 2001, were trading for a mere fraction of their high price before they were canceled in September as part of the bankruptcy reorganization.