The bankruptcy induced fire sale of the LandAmerica title insurance underwriters to Fidelity National is becoming more complicated. Matt Carter at Inman News updated the story Friday. You can read the entire article here.
The unsecured creditors of LandAmerica are raising questions about the valuation given the title underwriters in the deal with Fidelity. Don't be surprised by that development. Once Fidelity cancelled the original deal, LandAmerica's status as a going concern became tenuous at best. Fidelity jumped on that opportunity to pick up the plum assets with few of the liabilities. The bankruptcy of LandAmerica probably makes the deal easier for the Federal Trade Commission to approve, as well.
Another development is that Stewart Title reportedly made an offer for the underwriting companies with the Nebraska Insurance Department that is the first regulator that must approve any deal. I personally favor a Stewart acquisition. Having about 85 percent of the national title insurance distribution system split roughly equally between three companies is preferable to having two companies control 75 percent of the market. Three large companies create more competition for good title agents and their clients. Three large companies also make it less likely that Fidelity and First American (two companies that mostly hate each other but now have common business objectives) could impose their will on the market place unchallenged.
Its being widely reported this morning that a condition of Fidelity's offer is that the acquisition of Lawyers Title and Commonwealth Title must be approved by December 22nd. So the coming week is potentially the most important week in the history of title insurance.
Finally, I can't resist quoting Ted Chandler, Chairman and CEO of LandAmerica when announcing the bankruptcy filing and sale to Fidelity. "I am deeply disappointed over the need to file for bankruptcy protection . . . However, this sale . . . to Fidelity National . . . offers our stakeholders the best result available in this brutal real estate, credit and capital market environment."
As part of this deal, Fidelity reportedly agreed to assume the liability of $45 million in deferred compensation owed the management of LandAmerica.
Way to look out for your "stakeholders", Ted.
Don't forget to wish your employees "Happy Holidays."
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