Indianapolis ? When Conseco Inc. bought Green Tree Financial in 1998, the fast-growing insurer hailed the deal as the breakthrough it needed to become a financial-services supermarket to middle America.

Instead, the $6 billion acquisition has turned into a nightmare, triggering a torturous stock slide that forced Conseco to file for Chapter 11 bankruptcy protection last week.

Although the filing was not surprising given Conseco’s recent woes, it marked a dramatic downfall for the company whose stock was once a Wall Street darling. From 1988 to 1998, the company’s stock averaged a total return of 47 percent per year and Conseco shares traded as high as $58. Today, the stock trades at less than a nickel per share.

Observers say the 23-year-old company was led astray by a series of missteps in the 1990s that took it off its earlier path of successful insurance acquisitions and into a wide range of unrelated businesses. The company gained naming rights to Conseco Fieldhouse, home of the NBA’s Indiana Pacers, and bought interests in everything from a riverboat casino to Manhattan’s General Motors building in partnership with developer Donald Trump.

“The senior management of the company went on an aggressive growth path at the wrong time, and brought on billions of dollars of debt that we’re now dealing with today,” said Robert Rodriguez, of Los Angeles-based First Pacific Advisors, one of the Carmel, Ind.-based company’s largest institutional shareholders.

In particular, the Green Tree deal is viewed as a watershed event. The acquisition, experts say, transformed Conseco into a debt-burdened shell unable to shake off $6.5 billion in debt.

“It was the major act that pushed the ball rolling down the hill,” Todd Saxton, an Indiana University business professor specializing in corporate strategy and governance, said.

Observers now say Green Tree’s problems should have been obvious when Conseco, under the leadership of its co-founder Stephen Hilbert, bought it.

An employee leaves Conseco Inc. in Carmel, Ind. In the third-largest bankruptcy in U.S. history, Conseco Inc. filed for Chapter 11 protection on Dec. 17, after four months of talks with creditors to restructure the insurance and finance company's .5 billion in debt.

Green Tree’s balance sheet “was a disaster in the making,” said David Erb, managing director of Merrion Group LLC, a New Jersey-based investment firm.

“It was an acquisition that was completely out of Conseco’s expertise,” Erb said. “There was really little synergy between Green Tree and the insurance operations, and Hilbert vastly overpaid for it.”

Indeed, Conseco shares dropped nearly 15 percent the day the Green Tree deal was announced.

The stock’s slide continued, and, two years later, Hilbert was ousted after piling up $8.2 billion in debt, including a $545 million loan that enabled company insiders to buy additional company stock.

Hilbert’s successor was Gary Wendt, who earned a reputation as a savvy cost-cutter in the 1990s as head of GE Capital Services.

Wendt unloaded about $2 billion in debt, largely through asset sales, but was unable to boost the company’s languishing stock as manufactured housing industry troubles continued amid the recession, leaving Conseco with a glut of repossessed properties. Meanwhile, credit downgrades hurt insurance operations.

Wendt gave up on his turnaround plan in August in favor of the restructuring talks, and resigned as chief executive Oct. 3 while staying on as board chairman. He was replaced by William Shea, who joined Conseco as chief operating officer in September 2001.

With $52 billion in assets as of Sept. 30 and about 13,000 employees nationwide, the company hopes to emerge from bankruptcy quickly so its insurance operations can shake off inferior credit ratings tied to the parent company’s debt. Conseco maintains its insurance operations, which accounted for $5.8 billion, or three-quarters, of Conseco’s revenues last year, are sound.

Gary Wendt exits the corporate headquarters of Conseco in Carmel, Ind., Wendt resigned as chief executive officer of Conseco on Oct. 3.