UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: August 28, 1998
(Date of earliest event reported)
NATIONAL WESTERN LIFE INSURANCE COMPANY
(Exact Name of Registrant as Specified in Its Charter)
Colorado
(State or Other Jurisdiction of Incorporation)
2-17039 84-0467208
(Commission File Number) (I.R.S. Employer Identification Number)
850 East Anderson Lane, Austin, Texas 78752-1602
(Address of Principal Executive Offices and Zip Code)
(512) 836-1010
(Registrant's Telephone Number, Including Area Code)
Item 5. Other Events
By order dated August 28, 1998, the United States Bankruptcy Court, Southern
District of Texas, Houston Division, confirmed and approved the Third Amended
Joint Consensual Plan of Reorganization (the "Plan") of The Westcap
Corporation and its wholly owned subsidiary Westcap Enterprises, Inc. (jointly
"Westcap"). Westcap is a wholly owned subsidiary of National Western Life
Insurance Company (the "Registrant"). The Plan will be effective September
16, 1998, in the absence of any unexpected contingency. Pursuant to the Plan,
Registrant will receive credit for $1,000,000 previously contributed to
Westcap in bankruptcy in March, 1997, and will pay an additional $14,125,000
to compromise and settle (i) all claims of Westcap against Registrant, and
(ii) all claims and litigation of certain settling creditors of Westcap who
have alleged federal or state securities law "control person" violations by
Registrant relating to Westcap's brokerage business, in exchange for full and
complete releases from all of such claims, litigation and alleged violations.
Approximately $7,979,000 will be paid and transmitted to a Disbursing Trust
Committee on behalf of Westcap for payment to holders of allowed claims
against the Westcap debtors. Included in this amount are Westcap assets
totaling approximately $568,000 which remain primarily from the Registrant's
$1,000,000 contribution as described above. Registrant will also pay a total
of approximately $6,714,000 to other settling Westcap creditors with allowed
claims against the Westcap debtors who are also settling with and releasing
Registrant from alleged federal or state securities law "control person"
violations relating to Westcap. The settling creditors are:
City of Tracy, California; Michigan South Central Power Agency; Covafer,
S.A. and Sergio Covarrubias; Sheriff of Palm Beach County, Florida; San
Antonio River Authority; Tom Green County, Texas; Eduardo and Antonietta
Saad; City of La Mesa; Darlington County, South Carolina; Greenwood County,
South Carolina; Bernice and Sarah Finger; Winston-Salem State University
Foundation; Mary Robin Christison; Mason Tenders; Clerk of the Circuit Court
of St. Lucie County, Florida.
Pursuant to the Plan, Registrant will retain 100% continuing ownership of the
reorganized Westcap. Westcap will no longer engage in brokerage operations,
but will operate as a real estate management company.
The Chicago City Colleges is excluded from the compromise and settlement by
Registrant with the settling creditors, but will participate with all
creditors in the distribution from Westcap. Chicago City Colleges previously
obtained a bankruptcy court judgment for approximately $56 million against the
Westcap debtors. Under the Plan, Chicago City Colleges will participate in
the $7,979,000 creditor distribution relating to an allowed $30 million claim,
with any distribution relating to the remaining $26 million claim in dispute
pending an appeal by Westcap of the $56 million judgment. Should Westcap
prevail in the appeal, Registrant will be entitled to recover 23.1% of the
reduced amount of the Chicago City Colleges judgment, but not to exceed
$600,000. Should Westcap lose the appeal, Chicago City Colleges will receive
a higher prorata percentage of the $7,979,000 creditor distribution. However,
pursuant to the Plan, Registrant will have no additional liability for
settlement payments in excess of the $14,125,000 as described above. Under
the Plan, Registrant will pay all of the attorneys' fees and court costs
incurred by Westcap in the appeal of the Chicago City Colleges' judgment.
The $14,125,000 settlement payment will be reflected as a loss from
discontinued brokerage operations in the consolidated financial statements of
National Western Life Insurance Company for the quarter ended September 30,
1998. The $1,000,000 previously contributed to Westcap in bankruptcy was
reflected as a loss from discontinued brokerage operations in the first
quarter of 1997. Any additional losses will depend on the results of the
Chicago City Colleges lawsuit filed against National Western Life Insurance
Company on March 28, 1994, for alleged federal or state securities law
"control person" violations relating to Westcap, and which is pending in the
United States District Court, Western District of Texas. Registrant believes
it has reasonable and adequate defenses to this suit and, accordingly, no
amounts have been accrued in the Registrant's consolidated financial
statements for potential losses relating to such suit.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
Exhibit 2 - Order Confirming Third Amended Joint Consensual Plan Of
Reorganization Proposed By The Debtors And The Official
Committee Of Unsecured Creditors (As Modified As Of August 28,
1998).
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
National Western Life Insurance Company
(Registrant)
Date: September 10, 1998 By: /S/ Ross R. Moody
Ross R. Moody
President and Chief Operating Officer