AHUSCO's core exposure runs through SPARTA, an insurance run-off subsidiary that inherited legacy liability for pre-2007 American Employers Insurance Company policies after Bedivere Insurance Company, which had been paying those claims, was placed into liquidation in May 2020. According to the declaration of chief restructuring officer Peter Kravitz filed in support of the first-day motions, SPARTA has made more than $114.3 million in claim-handling and loss payments since inception, including over $100 million paid since late 2021. SPARTA sued Pennsylvania Insurance Company (PIC) in 2021 to enforce PIC's contractual obligation to pay those claims, and on September 30, 2025 won summary judgment establishing PIC's liability, with damages still to be calculated; SPARTA and PIC reached a confidential settlement in principle in April 2026. Separately, the Roman Catholic Church of the Archdiocese of New Orleans asserted a $360 million liability demand against SPARTA for legacy AEIC claims during its own chapter 11 case, which SPARTA settled for $21 million.
To fund SPARTA's obligations, AHUSCO on-lent approximately $135 million to the subsidiary, drawn under a Catalina Finance LLP credit facility that grew from an initial $100 million commitment in July 2023 to $150 million in June 2024 and $160 million by June 2026. Trade publication KCIC reported that SPARTA received $53.5 million of parent cash in exchange for surplus notes in 2023 and an additional $20 million in the first half of 2024, consistent with the declaration's account of SPARTA drawing on $179 million in surplus notes issued to AHUSCO. Catalina Holdings (Bermuda) Ltd., AHUSCO's ultimate parent, has completed more than 32 non-life insurance run-off transactions covering over $10 billion of gross technical provisions. Affiliates of Apollo Global Management acquired a majority stake in Catalina Holdings beginning in 2013, completing a shareholder restructuring in 2018 that left Apollo as majority owner alongside a minority stake held by RenaissanceRe Holdings.
The debtors' prepetition capital structure totaled approximately $280 million, split between the CatFin credit facility and $120 million in trust preferred securities (TruPS) issued by AHUSCO in 2004 under an indenture with Wilmington Trust Company as trustee. As of the petition date, the CatFin facility carried an outstanding balance exceeding $230 million, up from a $108.5 million principal balance recorded at the end of 2024 after a $2.6 million commitment fee was capitalized into the facility in October 2023 and the facility accrued $19.3 million of interest expense in 2024 alone. Hildene Capital Management, represented by Quinn Emanuel Urquhart & Sullivan, holds $60 million of the TruPS claims.
CatFin separately ran a tender offer for the TruPS beginning in 2024, offering $10 per $100 of face value and spending approximately $1 million to acquire $10 million of TruPS principal. AHUSCO, CatFin, and Hildene executed a restructuring support agreement on June 8, 2026 that set two possible outcomes: a $25 million cash payment to TruPS holders if a follow-on out-of-court tender offer reached 100% participation, or a $20 million cash pool distributed through a chapter 11 plan if it did not. AHUSCO launched that tender offer on June 11, 2026, with Hildene and the prepetition facility lender — holders of roughly 60% of the TruPS — tendering their claims, but participation fell short of the 100% threshold, triggering the RSA's chapter 11 cash-pool alternative. AHUSCO paid approximately $84 million in aggregate interest on the TruPS-related debentures between 2004 and 2023, according to the Kravitz declaration.
Case professionals. Peter Kravitz serves as chief restructuring officer, with Province, LLC as financial advisor and Sidley Austin LLP as global restructuring counsel to the debtors. Independent director Pamela Corrie, appointed to AHUSCO's board on July 24, 2025 to oversee the restructuring, is represented separately by Greenberg Traurig LLP. White & Case LLP represents CatFin as prepetition and proposed postpetition lender, and Quinn Emanuel Urquhart & Sullivan represents Hildene as the largest identified TruPS holder.
DIP Financing and the CatFin Postpetition Facility
The court authorized the debtors' interim use of cash collateral in an interim order entered July 20, 2026; up to $35 million of new postpetition financing from CatFin as an incremental commitment under the existing facility remains subject to approval at a final hearing. The postpetition facility accrues paid-in-kind interest at 13% plus the Compounded Reference Rate, carries a commitment fee equal to 35% of the margin on the available commitment (also paid in kind), and matures July 25, 2027. The financing grants CatFin superpriority administrative claims under section 364(c)(1) of the Bankruptcy Code, senior to other administrative claims but subject to a carve-out of up to $2 million for debtor professional fees and up to $50,000 each for committee professional fees and potential chapter 7 trustee fees.
Adequate protection for the Prepetition Facility Secured Parties includes replacement liens and superpriority claims to the extent of any diminution in collateral value, plus payment of the secured parties' reasonable fees and expenses. The financing motion set a compressed milestone schedule: the plan and disclosure statement were required to be filed within 24 hours of the petition date (which the debtors met), the interim cash collateral order within 3 business days (entered July 20, 2026), a final financing order within 30 calendar days, a combined hearing order within 5 business days (entered July 20, 2026), entry of a confirmation order within 60 calendar days, and a plan effective date on or before October 16, 2026. Debtors must deliver weekly budget variance reports, and any material deviation from the approved budget constitutes a termination event under the facility.
The joint chapter 11 plan filed alongside the petitions sorts claims and interests into eight classes. Other secured claims (Class 1) and other priority claims (Class 2) are unimpaired and deemed to accept, paid in full in cash or reinstated. Prepetition Facility claims (Class 3) are impaired and entitled to vote; holders may receive a pro rata share of a Prepetition Facility Cash Pool, a replacement note, conversion into equity of reorganized AHUSCO, or reinstatement, as agreed between the debtors and each holder. The disclosure statement projects a 12.5% recovery for the roughly $160 million in Class 3 claims. TruPS claims (Class 4) are also impaired and voting, with the indenture trustee receiving the TruPS Cash Pool — funded by the $20 million RSA cash pool — for distribution to holders subject to the indenture trustee's charging lien; the disclosure statement projects an 18.2% recovery for the $120 million in Class 4 claims, reflecting the prepetition facility lender's waiver of its own pro rata share of the TruPS cash pool in favor of other TruPS holders.
General unsecured claims (Class 5) are unimpaired and slated for reinstatement. Section 510(b) claims (Class 6) are impaired, deemed to reject, and subordinated with no recovery. Intercompany claims (Class 7) and intercompany interests (Class 8) are addressed at the debtors' option with the consent of the plan sponsor, generally without separate distribution, and existing equity in reorganized AHUSCO is subject to dilution or replacement by the equity interests issued to Prepetition Facility claimholders. The plan does not contemplate substantive consolidation, applying classification and treatment separately to each of the three debtor entities.
Alongside the restructuring of AHUSCO's holding-company debt, the debtors are pursuing private sales of two operating insurance subsidiaries, ANAIC and NAICC, to buyers identified in filings only as the "ANAIC Purchaser" and "NAICC Purchaser." The debtors say they secured the purchasers after a several-year prepetition marketing process and are seeking court approval of the negotiated stock purchase agreements without a further auction, citing the limited pool of buyers qualified to hold highly regulated insurance licenses. The debtors moved to file the SPAs under seal and to redact the purchasers' identities, purchase prices, and other material contract terms from the public docket, arguing that confidentiality is both commercially necessary to preserve deal value and required under the terms of the SPAs themselves. The transactions remain subject to insurance regulatory approvals the debtors expect to receive in the third quarter of 2026.
The debtors also sought a "comfort order" confirming that SPARTA, ANAIC, and NAICC are not themselves debtors, that their assets are not property of the bankruptcy estates other than the debtors' equity interests in them, and that state insurance regulators retain their existing authority over the subsidiaries notwithstanding the chapter 11 filings. The court granted that relief on an interim basis on July 20, 2026.
- 2004: AHUSCO issued $120 million in trust preferred securities; Catalina Holdings later acquired the Alea group in 2014.
- May 2020: SPARTA's liability exposure increased following the liquidation of Bedivere Insurance Company.
- July 25, 2023: CatFin's initial $100 million prepetition credit facility was established.
- September 30, 2025: SPARTA won summary judgment against Pennsylvania Insurance Company establishing PIC's liability for legacy claims, with damages still to be calculated.
- April 2026: SPARTA and PIC reached a confidential settlement in principle on the legacy litigation.
- June 8, 2026: AHUSCO, CatFin, and Hildene executed the restructuring support agreement.
- June 30, 2026: The CatFin facility was amended to a $160 million commitment.
- July 19, 2026: The debtors filed chapter 11 petitions, a joint plan and disclosure statement, the DIP/cash collateral motion, and the private-sale sealing motion.
- July 20, 2026: The court held the first-day hearing and entered an order retaining Omni Agent Solutions as claims, noticing, and solicitation agent.
- August 13, 2026 (targeted): Second-day hearing on the final financing order and private sale motion.
- August 26, 2026: General claims bar date, set by court order entered July 20, 2026.
- September 2, 2026: Voting, opt-out, and plan/disclosure statement objection deadlines, set by court order entered July 20, 2026.
Who is the claims agent for Alea Holdings US Company?
Omni Agent Solutions, Inc. serves as claims, noticing, and solicitation agent under a retention order the court entered July 20, 2026, the day after the petition date.
What is the claims bar date?
The court entered an order July 20, 2026 setting August 26, 2026 at 4:00 p.m. Central Time as the general bar date for filing proofs of claim, with a later deadline for claims arising from any amended schedules.
Is this a prepackaged bankruptcy?
The debtors filed their joint chapter 11 plan and disclosure statement on the same day as the petitions, built around the restructuring support agreement executed with CatFin and Hildene on June 8, 2026, but the plan requires solicitation and a confirmation hearing rather than pre-petition voting.
Are SPARTA, ANAIC, and NAICC also in bankruptcy?
No. AHUSCO, AGHBL, and FIN Alea LLC are the only debtors. The filings seek a court order confirming that the non-debtor insurance subsidiaries are not affected by the chapter 11 cases and that state insurance regulators retain authority over them.
Who is the judge in the case?
Judge Christopher Lopez is presiding over the jointly administered cases in the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division.
Other negotiated holding-company restructurings covered by ElevenFlo include Hallmark Financial Services' prepackaged insurance holding-company case and Novation Companies' RSA-anchored second chapter 11.
