A federal judge said Friday he will approve a plan to liquidate the assets of Charles Keating Jr.'s American Continental Corp., the former parent company of Lincoln Savings and Loan. Under the plan, American Continental's assets would be liquidated over three years to provide partial payment to the company's 25,000 creditors, who are owed $365 million. More than 9,200 creditors participated in a recent vote on the proposal, and 95 percent approved it, said Donald Gaffney, an attorney for unsecured creditors. He said the plan also was accepted by all classes of creditors. The plan was opposed by Keating and some of his former top executives, who invested in the company's securities. They said it would push them to the end of the creditors' line and make it unlikely they would receive any money. But no one spoke against the plan when Gaffney outlined it to District Judge Richard Bilby. The judge said he would approve the plan but didn't specify when. ``You've accomplished the impossible,'' Bilby told lawyers in the case. ``It's like almost any settlement I've known. There ain't much in it for anybody.'' Lincoln Savings, based in Irvine, Calif., was seized by federal regulators in April 1989, just one day after American Continental and 11 Lincoln Savings subsidiaries filed for protection under Chapter 11 of the U.S. Bankruptcy Code. Federal officials have said Lincoln's failure could cost taxpayers $2 billion. The case has become symbolic of the national S&L debacle. Keating and other Lincoln executives are the subject of a class-action lawsuit alleging they misled investors about the safety of junk bonds issued by American Continental. Nearly 18,000 investors lost $250 million, authorities allege. In addition, the Senate Ethics Committee is holding hearings on whether five senators - Dennis DeConcini, D-Ariz.; Alan Cranston, D-Calif.; John McCain, R-Ariz.; John Glenn, D-Ohio; and Donald W. Riegle Jr., D-Mich. - improperly intervened with federal regulators on Keating's behalf because of the $1.3 million he and associates contributed to their campaigns and favorite causes. Unsecured creditors of American Continental can expect to receive their first payments by the end of January, said Gaffney, who represents the Unsecured Creditors Committee. Some 22,000 unsecured creditors hold American Continental bonds. Gaffney said the bondholders' first checks probably will amount to ``pennies on the dollar'' on their investment. The timing and amount of later checks would depend on liquidation of American Continental assets, now valued at $9 million, and outcome of suits filed by creditors against Keating, Keating associates and legal and accounting firms which advised American Continental. A proposal approved by Bilby Nov. 16 to allow the Lincoln Savings subsidiaries to pay their creditors would go into effect with the liquidation plan. The subsidiaries' creditors will receive virtually all the $120 million they are owed. Under the liquidation proposal, Thomas Arnold Jr., a Phoenix consultant who was appointed by Bilby to head American Continental, and three other members of a steering committee would wind down the company's operations over a three-year period. The plan is a compromise between the creditors and the federal Resolution Trust Corp., the agency set up to handle the nation's S&L bailout. It includes an agreement by the RTC to pay $21 million into American Continental's bankruptcy estate in exchange for being allowed to become a party in civil lawsuits filed by bondholders against Keating and his associates.
