Conseco Trying To Push Back Due Dates

Secured claims are those backed by specific properties or income streams. Unsecured claims are backed only by a company's ability to make its payments.

Holders of senior notes come before creditors holding subordinated notes.

In bankruptcy court, the holders of senior, secured notes would be in a better position than subordinated, guaranteed notes, and holders of the subordinated guaranteed notes would probably be in a better position that holders of ordinary, senior unsecured notes.

Moody's Investors Service, New York, put out an alert stating that, although the claims of the holders of the new guaranteed Conseco notes would come before the claims of holders of the old, senior unsecured notes, they would still come behind the claims of Conseco's bankers.

Moody's analysts are still looking closely to see whether Conseco can come up with the cash it needs when it needs the cash, the firm says.

Analysts in the Chicago office of Fitch Ratings, a credit rating agency, reacted to the Conseco announcement by placing ratings of existing Conseco debt securities on "Rating Watch Negative."

Fitch does not view the proposed note exchange offer as a "distressed debt exchange," firm says.

But, if nothing else, the exchange would weaken the position of the holders of the notes that are now subordinated to the new, guaranteed notes, Fitch says.