LOS ANGELES -- Supporters of a modified rehabilitation plan for the failed Executive Life insurance Co. expressed delight yesterday over a California appellate court's refusal to block a transfer of the company's assets to a successor company.

"This is great news for us," a spokesman for the new entity, Aurora National Life Insurance Co., said about Tuesday's court decision. Aurora is controlled by a French investor group led by Mutuelle Assurance Artisanale de France.

The spokesman said a closing of the transaction probably will occur in a matter of days.

Lawyers for trustees and underwriters of $1.65 billion of taxable municipal bonds tried to convince the appellate court to issue a stay that would have prevented the plan from closing until their opposing arguments can be considered. The taxable bonds are secured by Executive Life guaranteed investment contracts.

Lawyers for the so-called muni-GIC holders contend that the modified plan is still flawed, arguing it discriminates in valuing their clients' claims. The lawyers successfully challenged an initial rehabilitation plan; the modified proposal was designed to address concerns raised in a previous appellate decision.

Robert Wallan, whose law firm of Pillsbury, Madison & Sutro represents the trustees, stressed that Tuesday's court action is not a decision on the merits of the appeal. The appellate court simply declined to grant an expedited hearing, and Wallan said that arguments can still be heard after the deal closes.

California Insurance Commissioner John Garamendi, who crafted the rehabilitation plan, said in a statement that he finds it "very encouraging that such rulings were made by the same appellate court that has monitored the rehabilitation process closely from its outset."

Garamendi said he hoped "the few remaining opponents to our plan will now put aside their objections."

Some bondholders recently expressed a desire to see the litigation end in favor of negotiation and compromise. But other bondholders have questioned whether it is premature to halt their opposition at this stage of the proceeding.

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