Creditors to Submit Bid for First Capital : Buyout: The group, which has teamed with the parent of Colonial Penn Life Insurance Co., plans to give regulators a formal offer Friday.

First Capital Holding Corp.’s creditors committee announced Wednesday that it had teamed up with Leucadia National Corp., the parent of Colonial Penn Life Insurance Co., to submit a buyout bid for troubled First Capital Life Insurance of San Diego.

Details of the bid were not disclosed. But the group said its bid will provide more value to First Capital Life policyholders than a competing offer previously made by Shearson Lehman Bros.

A spokesman for the creditors’ group said their formal offer will be submitted to regulators Friday, which is the deadline Insurance Commissioner John Garamendi set to receive bids for the seized insurer.

Several other bidders are also expected to submit offers Friday. Industry insiders say that both Transamerica Corp. and Pacific Mutual Life Insurance are weighing offers for First Capital. However, regulators refuse to discuss any ongoing negotiations.

Beverly Hills-based First Capital Holdings, which is reorganizing under Chapter 11 of the bankruptcy code, is the parent of First Capital Life and Fidelity Bankers Life, which were seized by regulators last May.

Both life insurance subsidiaries had large investments in risky junk bonds. The insurers were seized after the company suffered large losses in its junk bond portfolio and thousands of policyholders sought to cash in their policies.

The holding company owes banks and bondholders about $400 million, but has little chance of making good on those debts without getting some money from the sale of its life insurance subsidiaries, according to sources close to the proceedings.

Shearson, the New York brokerage house, has offered to buy First Capital Life in a $50-million deal, while ITT Hartford Life has submitted an offer for Fidelity Bankers. Both the ITT and Shearson deals promise to pay policyholders 100 cents on the dollar, but unsecured creditors of the holding company would get significantly less, if anything.

First Capital’s creditors group said its offer also does not promise much to creditors. But it plans to retain the “potentially valuable right to sue” companies that some believe were partially responsible for First Capital’s failure, said Dean Ziehl, an attorney representing the creditors’ group.

First Capital’s creditors’ committee has been critical of the Shearson agreement because it indemnifies Shearson and Citicorp, one of First Capital’s biggest lenders, from liability. Some company shareholders and employees place part of the blame for First Capital’s failure on Shearson, which sold the bulk of First Capital Life’s policies and owns 28% of First Capital Holding’s stock.

The creditors’ committee partner, Leucadia National, is a diversified concern engaged in property-casualty insurance, banking, real estate and manufacturing. Through its interest in two leveraged buyout firms, it holds substantial equity interests in several public companies.

Leucadia acquired Colonial Penn in August, 1991, from FPL Group for $125 million. Colonial Penn is a Philadelphia-based direct marketer of personal lines of insurance primarily to individuals 50 years of age and older.