Acceptance request to reject trust indenture draws SEC opposition

By Caroline Salls

Pittsburgh, April 28 - Acceptance Insurance Co.'s request to reject the trust indenture between the company and Deutsche Bank Trust Co. Americas drew objection Thursday from the Securities and Exchange Commission in a filing with the U.S. Bankruptcy Court for the District of Nebraska.

Deutsche Bank is the indenture trustee for Acceptance's debentures, of which $115.06 million were outstanding as of Nov. 30, 2004.

In the filing, the SEC said the indenture for the debentures contains a provision that says any expenses and compensation incurred by Deutsche will be considered administrative expenses now that Acceptance had filed for bankruptcy.

"It appears that [Acceptance] filed its motion to reject the indenture because it is concerned that the indenture trustee will attempt to enforce this provision," the SEC said in the filing.

However, Deutsche has indicated to both Acceptance's counsel and the SEC that it is willing to stipulate that it will not assert an administrative claim based on this provision.

In addition, the SEC said a trust indenture "is not an executory contract subject to rejection."

Acceptance, a Council Bluffs, Iowa-based insurance company, filed for bankruptcy on Jan. 7. Its Chapter 11 case number is 05-80059.

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