Wednesday, LandAmerica Financial Group, Inc. (LFG), a provider of real estate transaction services, said the company and a subsidiary LandAmerica 1031 Exchange Services, Inc. have filed voluntary petitions for relief under Chapter 11 of the US Bankruptcy Code in the US Bankruptcy Court for the Eastern District of Virginia. None of its many other businesses are seeking bankruptcy protection, the company said.
LandAmerica also signed a definitive stock purchase agreement for the sale of its two principal title underwriting subsidiaries, Lawyers Title Insurance Corp. and Commonwealth Land Title Insurance Co., as well as United Capital Title Insurance Co. to Fidelity National Financial, Inc. (FNF) for a total purchase price of $298 million.
In a separate statement, Fidelity National said that Chicago Title Insurance Co. will acquire Commonwealth for $158.6 million and Fidelity National Title Insurance Co. will buy Lawyers and United for $139.4 million. Both companies noted that the closing of the transactions are expected to take place as early as late December 2008.
LandAmerica noted that the filing is to facilitate the closing of the transactions under the stock purchase agreement and protect its remaining assets following the recent announcement of the termination of its 1031 exchange business.
In conjunction with the filings, the company said it is seeking a motion for expedited approval of the transactions contemplated by the agreement.
The closing of the sale of the subsidiaries are subject to approvals by the Bankruptcy Court, the Nebraska Department of Insurance, and other state and federal regulatory agencies. The company said it will request expedited approval from the Bankruptcy Court. According to Fidelity National, the deal is also subject to Hart Scott Rodino approval and the receipt of Form A approvals from applicable state insurance regulators.
LandAmerica noted that the Nebraska Department of Insurance on Monday, November 24, filed petitions for rehabilitation for Commonwealth and Lawyers Title under the Nebraska Insurance Code. Hearings on the petitions are set for later Wednesday.
LandAmerica said it expects that rehabilitation orders will be entered quickly and that the rehabilitations will function as a temporary administrative step to assist the transition of the businesses to Fidelity National. The company noted that both of its title underwriting subsidiaries are entirely solvent, and will continue to operate and serve customers during the completion of the sale.
Theodore Chandler, Jr., Chairman and Chief Executive Officer, stated, "I am deeply disappointed over the need to file for bankruptcy protection for the LandAmerica holding company and the 1031 company. However, this sale of our principal domestic title operations to Fidelity National in this coordinated Chapter 11 filing and Nebraska rehabilitation action offers our stakeholders the best result available in this brutal real estate, credit and capital market environment."
Together with the bankruptcy filing, LandAmerica is seeking customary authority from the Bankruptcy Court that will enable it to continue operating its business and serving its customers in the ordinary course. LandAmerica will make similar requests of the Nebraska Department of Insurance in connection with the rehabilitation process.
According to the company, its termination of the merger agreement with Fidelity National in February, and the discontinuation of the 1031 Exchange business caused the acceleration of these actions.
LandAmerica added that it plans to continue its assessment of strategic opportunities for its remaining businesses following the consummation of the stock purchase and under the protection of Chapter 11.
LFG closed Tuesday's regular trading at $0.91, up $0.40 or 78.43%, on a volume of 5.4 million shares. In the after-hours trading, shares fell 6.59% to $0.85.
FNF settled at on Tuesday at $10.19, up $1.84 or 22.04%, on a volume of 6 million shares.
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