You used to call it Conseco Financal Services. Now you call it Mill Creek. But whatever you do, don’t call it bankrupt. Because the company that provides financial services to the powersports industry hasn’t filed for bankruptcy protection, and it’s doing business the way it always has.
There is one big change, though: it’s negotiating to be purchased by a company called CFN Investment Holdings, LLC.
Thats the story in a nut shell. But, obviously, there’s more to the story.
Conceco Finance’s relationship with the powersports industry isn’t a new one — it dates back to 1989, and the company had receivables of about $2 billion at the end of last year.
As I read the initial news about Conseco, Inc., the giant insurance and financial services company based in suburban Indianapolis, Ind., filing for Chapter 11 bankruptcy protection, and the subsequent reports about creditors battling for control, I wondered what it meant for powersports companies who had been doing financing business with Conseco Finance Corp.
The confusion was compounded by statements that said some of the Conseco companies were filing for protection, but others were not. That was good for some companies and creditors and customers, but which ones?
Making things even more muddled was an earlier, Oct. 18 announcement from the company, that units of Conseco Finance Servicing Corp. were now “operating as Mill Creek Servicing Corporation.”
Of course I didn’t get any help from the filing documents Conseco sent to the Securities and Exchange Commission. But that may have been caused by my ineptitude.
One thing I can say for certain is that work on the Conseco corporate structure must have paid for some pretty comfortable retirements for plenty of attorneys. It’s really complicated.
But I digress. Anyway, hat in hand, so to speak, I phoned Mary Beth Schwartz, director of communications and public relations, in St. Paul, Minn., for clarification.
Ms. Schwartz was very pleasant and quite helpful. Here’s the deal:
- Conseco Finance Corp., (CFC) is owned by Conseco, Inc., the Indiana company. CFC, formerly called Greentree Financial Corporation, is based in St. Paul, Minn., and provides consumer financing for the purchase of powersports equipment, among other things. Its primary business has been the financing of mobile homes and subprime lending programs.
- CFC provides private label credit cards and financing programs through dealers so customers can finance the purchase of products they buy from dealers. In the powersports industry, installment financing is provided to consumers for the purchase of motorcycles up to $35,000. It also provides revolving lines of credit for consumers to use on smaller powersports purchases.
The financing is provided through the company’s Funancing program. Details are available at www. funancing.com or at www.millcreekbank.com.
- In October 2002, the CFC business units that provide powersports financing took the name Mill Creek Servicing Corporation, reflecting their close working relationship with Mill Creek Bank (formerly called Conseco Bank), a wholly-owned subsidiary of CFC. Mill Creek Bank is the country’s fourth largest private label credit card issuer, and has assets of nearly $3 billion.
So, we have Conseco, Inc., the parent company, owning Conseco Finance Corp., which owns Mill Creek Bank which owns Mill Creek Servicing Corporation, which provides financial services to customers of powersports dealers.
- On Dec. 17, 2002, Conseco, Inc., and some of its subsidiaries filed for bankruptcy protection under Chapter 11 of the federal bankruptcy laws. This filing DID NOT include the Mill Creek operations.
- Finally, on Dec. 18, 2002, one day after the bankruptcy filing, CFC said it had reached an agreement in principal to be purchased by CFN Investment Holdings, LLC, a joint venture of Fortress Investment Group, J.C. Flowers & Co., and Cerberus Capital Management. Under the agreement, CFN would acquire all of the assets and operations of CFC, subject to certain conditions.
There, that should clear up everything.