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Centrix judge terminates stay on insurance payments
DENVER (6/27/08)--A U.S. Bankruptcy Court judge has denied a motion for extended relief from a stay on payments related to the Chapter 11 bankruptcy of Centrix Financial LLC, saying the issue is moot because the automated stay has expired. Centrix is a subprime auto lending service that serviced credit unions. Centrix Consolidated and Robert Sutton, former owner of Centrix Financial, filed the motion seeking relief June 20. According to the court documents, they sought authority for American International Speciality Lines Insurance Co., (AISLIC) to pay liability insurance proceeds under a policy for former officers and directors of Centrix for a policy period between Dec. 30, 2005, and Dec. 30, 2006. An automatic stay issued by the court earlier would not keep AIG from paying for defense costs incurred in other legislation related to Centrix's bankruptcy proceedings, Sutton and the others claimed in motion filed. They also argued they were entitled to relief from the automatic stay so AISLIC could pay defense costs. Judge Elizabeth E. Brown Wednesday issued an order denying the motion for relief from the stay, saying that the issue is moot. She noted that an amended plan of reorganization was confirmed May 16, and the assets of the estate were vested in the liquidating trust on June 2. The stay has terminated, she said, and is therefore moot. Centrix was placed under involuntary Chapter 11 protection on Sept. 15, 2006, by creditors IFC Credit Corp., Suntrust Leasing and Wells Fargo Equipment Finance Inc. They said Centrix owed them a combined $4.6 million in lease payments. Several days later Centrix and its affiliates filed voluntary petitions for Chapter 11 protection (News Now April 25). Credit unions and other entities have claimed millions against the company's assets. More than two-thirds of Centrix's portfolio is owned by roughly 230 credit unions throughout the nation. It underwrote more than 250,000 loans totaling $4 billion (News Now Sept. 6, 2002).


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