American Continental Corp., the parent of Lincoln Savings & Loan in Irvine, has given up its fight to keep its bankruptcy lawyers. Federal regulators have been trying to disqualify the two firms on grounds of conflict of interest because they represent the same regulatory bodies in cases involving other troubled S&Ls.;
In their place, Phoenix-based American Continental has hired the Los Angeles firm of Wyman, Bautzer, Kuchel & Silbert.
That is the same firm that American Continental Chairman Charles H. Keating Jr. turned to earlier this month when he retained Howard L. Weitzman to protect the company’s interests in ongoing criminal investigations.
American Continental, Arizona’s fourth largest company, filed a U.S. Bankruptcy Court petition on April 13 to reorganize its debts under Chapter 11 of the bankruptcy laws. The next day, regulators seized Lincoln Savings, alleging that it was being operated in an unsafe manner.
American Continental’s original bankruptcy lawyers, the Houston firm of Sheinfeld, Maley & Kay and the Phoenix firm of Bues, Gilbert, Wake & Morrill, were being challenged by regulators, who oppose the bankruptcy, because the same firms represented regulators in litigation involving other financial institutions.
“It was obvious we were going to fight this issue over and over again,” said Mark M. Connally, an American Continental spokesman. So the company decided to bring in a new law firm.
James J. Feder, head of Wyman Bautzer’s bankruptcy department, will oversee the bankruptcy case, while Weitzman will handle civil litigation.