Reorganization Plan Submitted for First Capital : Bankruptcy: The holding company would be liquidated and common stockholders would lose their investments.

First Capital Holdings Corp., the Los Angeles-based company that sought bankruptcy court protection in May, submitted a reorganization plan Tuesday that proposes to pay off some creditors by giving them a stake in its two failed life insurance subsidiaries.

The plan, which involves First Capital Life Insurance Co. in San Diego and Fidelity Bankers Life Insurance Co. in Richmond, Va., is contingent on the approval of state insurance regulators and state and federal courts.

The plan would liquidate First Capital and wipe out the investments of its common stockholders.

First Capital is the parent of both First Capital Life and Fidelity Bankers, but the holding company has little control over the life insurers’ assets. State regulators in California and Virginia seized both insurers last May in an effort to stem a flood of policy surrenders--the equivalent of a run on a bank--that started when worries about First Capital’s financial condition surfaced.

The problems of First Capital, which filed a Chapter 11 bankruptcy petition 10 months ago, have been traced to its extensive investments in risky junk bonds.

California regulators recently announced a rehabilitation plan for First Capital Life that would sell the ailing insurer to Shearson Lehman Bros. in a $50-million deal. Policyholders would get 100 cents on the dollar if they agreed to stick with the company through a five-year rehabilitation period.

Virginia regulators are still accepting bids for Fidelity Bankers Life. They will not reveal details of their discussions. They say they are talking to about a dozen interested buyers.

Regulators in both states said their efforts to rehabilitate the life insurance subsidiaries are not affected by First Capital’s reorganization plan.

“This has absolutely no bearing on our efforts to rehabilitate the insurance company,” said Ken Schrad, spokesman for the Virginia Corporations Commission, which is considering bids for Fidelity Bankers Life.

He would not comment on whether regulators would cooperate with the holding company’s reorganization.

First Capital’s plan is complex, but in essence it proposes to give senior secured creditors, who are owed some $260 million, an equity interest in both First Capital Life and Fidelity Bankers.

How much that interest would be worth is unclear. It will depend on the deals regulators strike to sell the insurers, as well as on the abilities of First Capital Life and Fidelity Bankers to generate profits in coming years.

General unsecured creditors would get roughly 50 cents on the dollar, according to First Capital Holdings. But common stockholders and owners of the company’s 13% senior subordinated debentures would get nothing.

“As a shareholder, I am outraged,” said Robert Bland of Darien, Ill.

The plan has the support of First Capital’s senior secured creditors, the company said. To go forward, it also requires settlement of policyholder and securities class-action suits, support from insurance regulators selling Fidelity Bankers and First Capital Life, and approval of state and bankruptcy court judges.