Attorneys for bankrupt Metropolitan Mortgage and one of its estranged subsidiaries have agreed on how to resolve the subsidiary's objections...

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Attorneys for bankrupt Metropolitan Mortgage and one of its estranged subsidiaries have agreed on how to resolve the subsidiary’s objections to Met’s proposed reorganization plan.

If all the steps click into place, thousands of stranded Met investors could see their first recovery checks within the next two or three months.

On Tuesday, a federal bankruptcy judge in Spokane, where the collapsed financial conglomerate is based, approved the deal involving Met, sister firm Summit Securities, and Met subsidiary Western United Life Assurance.

Two weeks ago, Western filed a formal objection to Met and Summit’s joint bankruptcy plan, under which investors holding $470 million of near-worthless notes could receive 15 to 19 cents on the dollar.

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That money will come from selling Met’s and Summit’s real-estate holdings and other assets. More money to repay investors could come from the pending sale of Summit’s insurance-company subsidiaries, the future sale of Western, and lawsuits against Met’s former accountants.

But Western argued that the plan effectively would force the insurer to give up tax allowances worth $20 million, reducing the price Western could command from a buyer.

Under the deal approved Tuesday, Met will transfer voting control of Western’s holding company to a trustee before Dec. 31, separating it from the rest of Met’s complex of companies for tax purposes.

Assuming that happens on schedule, said Met attorney Barry Davidson, shortly after the New Year, Met will ask the bankruptcy judge to confirm the plan. A first distribution, of about 9 cents on the dollar, could then be made.

Other of Western’s objections, involving how its own financial claims against Met will be settled, will be submitted to mediation, Davidson said.

Western has been run by the state Insurance Commissioner’s Office since March 2004, when it — along with Idaho-based corporate cousin Old Standard Life Insurance and its subsidiary, Old West Annuity & Life of Arizona — was put into receivership.

Last month, Idaho and Arizona regulators agreed to sell the two insurers in their states to Great American Life Insurance of Cincinnati for $21.4 million. That money, less receivership expenses, ultimately will flow to holders of Summit notes.

Bill Ripple, spokesman for Insurance Commissioner Mike Kreidler, said earlier that efforts to sell Western continue.

Drew DeSilver: 206-464-3145 or ddesilver@seattletimes.com