TO THE HONORABLE RICHARD M. BILBY, UNITED STATES DISTRICT JUDGE, THE HONORABLE SARAH SHARER CURLEY, UNITED STATES BANKRUPTCY JUDGE, THE UNITED STATES TRUSTEE, THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS, THE EXAMINER AND OTHER PARTIES IN INTEREST: Pursuant to its duties as a debtor in possession, American Continental Corporation (ACC) hereby submits its report to the above-referenced parties in interest regarding its attorneys investigation into: (1) the facts of ACC's organization and preand post-petition operations, (2) the basis for ACC's adversarial relationship with various regulatory agencies; and (3) the circumstances relevant to ACC's present condition that affect confirmation of a plan of reorganization. Shortly after filing its Chapter 11 petition, ACC presented a draft plan of reorganization to creditors and other parties in interest. However, the intransigence of the federal agencies asserting claims against the ACC estate have frustrated ACC's efforts to confirm a plan. This report is based upon the documents which were reviewed by ACC's attorneys in the course of ACC's compliance with court orders establishing the document depository; ACC's preparation of information in response to subpoenas and other requests by federal and state agencies; and the conduct of litigation brought by or against ACC. The investigation results reported by the attorneys for ACC places in perspective the many false allegations and leaks of negative misinformation from the federal agencies, as well as the continued abuse of governmental process and forms a basis for relevant investigation by the Examiner and ACC's creditors. R 000165 II. Introduction and Executive Summary... 2 American Continental Corporation Before the Acquisition 9 III. Deregulation of the Savings and Loan Industry........ 12 IV. Profile of Lincoln Savings and Loan Association IX. Opposition to the Direct Investment Rule Resulted in 44 XII. XIII. The 1988 and 1989 Regulatory Examinations.. 77 86 D. The LSAC Application (Rousselot II)...... ACC's Decision to Seek Protection Under Chapter 11 of .. 109 R 000166 95 99 107 TABLE OF DEFINED TERMS "ACC" means American Continental Corporation... "ACC" means American Continental Mortgage Company, a subsidiary of ACC.. "ADC" means Acquisition, Development and Construction....... "AFC" means American Financial Corporation, the predecessor of ACC.. Page 1 10 35 9 "AFLIC" means American Founders Life Insurance Company, a third-tier subsidiary of Lincoln....... 28 *AMCOR Funding" means AMCOR Funding Corporation, formerly Lincoln American Financial Insurance Company, a direct subsidiary of Lincoln..... 27 *AMCOR Investments" means AMCOR Investments Corporation, formerly Continental Homes Corporation, a subsidiary of Lincoln.... 'Arthur Andersen" means Arthur Andersen and Company, Certified Public Accountants... "Arthur Young" means Arthur Young & Company, Certified Public Accountants... "Bankruptcy Court" means the United States Bankruptcy Court for the District of Arizona.......... 28 37 37 ... 111 "California Department" means the California Department of Savings & Loan........... 3 "Castle Meadows' means Castle Meadows, Inc., a direct subsidiary of Lincoln..... 29 CFLIC" means Continental Fidelity Life Insurance Company, formerly Diversified Life Insurance Company, a second-tier subsidiary of Lincoln..... 27 ...... 'CHG' means The Crescent Hotel Group, a direct subsidiary of Lincoln.... 30 "CHGX" means The Crescent Hotel Group of Michigan, a second-tier subsidiary of Lincoln.... "CIG means Continental Insurance Group, a second-tier subsidiary of Lincoln.. 30 27 Face 'CLC' means Crescent Lending Corporation, a direct subsidiary of Lincoln..... 29 *CRESPIN" means CRESFIN Corporation, a direct subsidiary of Lincoln..... *ESOP" means the ACC Employee Stock Ownership Plan..... *FDIC" means the Federal Deposit Insurance Corporation...... 'FHLBB" means the Federal Home Loan Bank Board.. "YELB-SP" means the Federal Home Loan Bank of San Francisco "PIRREA" means the Financial Institutions Reform, Recovery & Enforcement Act of 1989 - P.L. 103 Stat. 183, also referred to as the "Bush Bailout"..... "TIMA" means the Federal National Mortgage Association...... "Foundation" means the nonprofit Phoenician Resort Swim Team Foundation...... *PSLIC" means the Federal Savings & Loan Insurance Corporation..... 8 76 39 3 5 8 10 121 *First Lincoln" means First Lincoln Financial Corporation, the direct parent of Lincoln............... "GAAP' means Generally Accepted Accounting Principles................... 10 95 56 'Hotel Stock" means Stock of the The Crescent Hotel Group and of CRESPIN Corporation..... 95 |