Reliance Group Holdings Inc., whose flagship insurance unit Reliance Insurance Co. has been taken over by the Pennsylvania Department of Insurance and may face liquidation, has filed for bankruptcy.

Reliance Group Holdings (RGH), which, according to bankruptcy court documents, has $300 million more in debt than in assets, reports having reached an agreement with some, but not all, of its creditors, and may face some opposition to its restructuring plan.

The debt, mainly due to unpaid insurance claims, built up as Reliance Insurance Co.'s (RIC) financial difficulties mounted. Faced with mounting claims and dwindling premiums, RIC's financial problems have also been worsened by large losses from a workers compensation insurance scheme.

Under the terms of the proposed restructuring, insurance policyholders will be repaid first, followed by Reliance's bank creditors and bond holders.

Billionaire investor Carl Icahn, who owns a significant amount of RGH's defaulted bond debt, is the major remaining opponent to the firm's bankruptcy plan.