State offers deal to end companies’ AIK Comp obligations; some members remain skeptical
Five years after the state took control of failed workers’ compensation fund AIK Comp, the Kentucky’s Department of Insurance has a tentative proposal that state officials say could put an end to the long ordeal faced by many of the businesses that bought coverage from the company.
Several thousand companies that were left on the hook for an estimated $90 million in unpaid workers’ comp obligations when the fund collapsed could be affected by the proposal.
Member companies are being offered the option to pay off their share of about $14 million in notes held by the Department of Insurance — interest-free — and be done with AIK Comp forever.
Members’ attorney says formal amendment required
Greg Mitchell, an attorney with Frost Brown Todd LLC who represents a group of 119 Kentucky companies that are AIK Comp members, said the companies he represents are awaiting more details.
He said any proposed motions to alter the 2005 reorganization plan would require an amendment.
“The details must be in that amendment to the plan,” Mitchell said.
But Mitchell, who has been involved since 2004 and is on the advisory board of the rehabilitator, pointed out that state officials haven’t filed a motion for such an amendment with Franklin Circuit Court, which oversees AIK’s rehabilitation, and that the reorganization plan from 2005 still is under appeal.
If a motion is filed to modify that plan and his clients hear the details, only then will they decide to support or oppose, he said. “Right now, we just have a concept.”
His main concern is that the state required members to pay immediately in lieu of a settlement from those AIK Comp executives who allowed the fund to collapse or from Ernst & Young, which audited the insurance fund.
“Our group has stayed together because there continues to be substantial issues,” Mitchell said. “It’s incumbent on (AIK Comp) to find a solution to this financial nightmare.”
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