Bankruptcy seems inevitable for Contifinancial Corp. as losses mount and more than $400 million of unsecured bank loans come due Friday.

The New York-based home equity lender reported on Wednesday that it lost $237.7 million, or $5.12 per share, in the quarter that ended June 30. That follows a $426 million loss for its fiscal year, which ended March 31. Conti's liabilities now exceed its assets, and several analysts said lenders have little incentive to extend the company's lifeline.

"Belly-up -- that's my prediction for Conti," said Fox-Pitt, Kelton analyst Reilly Tierney in New York. "They have negative equity which makes it very difficult for banks to lend it any more money."

"The banks are unlikely to extend their credit facilities to Contifinancial," agreed Ted H. Hu, an analyst at Williams Capital Group in New York.

On Wednesday, Contifinancial also announced plans to terminate another 30% of its 3,300-person staff. In November 446 employees were cut.

Banks including Credit Suisse, Dresdner Bank, and Bank of New York arranged a $200 million unsecured revolving loan to Conti in January 1997. Those three banks and others, including Chase Manhattan Corp., Bank of Nova Scotia, and Societe Generale, extended a $317 million letter of credit in 1998.

Roughly $422 million of that total remains outstanding and comes due Friday. Conti sold Triad Financial Corp., its subprime auto lending business, to Ford Motor Corp. in June for an estimated $125 million. About $95 million of the proceeds were used to pay back portions of its bank loans.

If Conti defaults, the company's senior note holders could argue that the $95 million was a preferential payment that the banks were not entitled to under bankruptcy laws. But lenders are expected to avoid that possibility by waiting until Sept. 15 to take any action that would force Conti into default. By that date, 90 days would have passed since the payment was made, and at that point it can no longer be challenged.

"I don't think (the banks) will take a huge hit if Conti defaults because the letters of credit are collateralized with Conti's mortgages," Mr. Hu said.

The lenders involved refused to comment on the record, but said negotiations with Conti would continue past Friday. One banker said Conti would probably be given more time to court a buyer. But analysts said Conti has little to offer a potential suitor.

Just last month, a rescue Conti was trying to negotiate with General Motors Residential Funding Corp. fell through. And last week's $1.5 billion in aid extended by Greenwich Capital Markets Inc. is not enough to solve Conti's problems.

Of the five analysts interviewed, only Mr. Tierney and Mr. Hu agreed to be quoted. Officials at Contifinancial, which is 78% owned by Continental Grain Corp., did not return phone calls.

Conti's stock price hit its 52-week low of $1.1875 last week. That's down from $20.25 on Aug. 18, 1998.

There are many parallels between Conti and United Cos., a rival that filed for bankruptcy on March 1 after defaulting on $1.2 billion owed to 22 banks. That experience is expected to chasten Conti's creditors.

"The banks just aren't going to put any more money into this, unless it's a bridge loan to liquidate the company and pay themselves back first," Mr. Tierney said. "On Friday, Conti may chose to use bankruptcy as a negotiating tactic."

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