Oct. 29--After a tumultuous month in which it was sued by lenders and placed under the control of a court-appointed special master, Brooke Corp. sought Chapter 11 bankruptcy protection Tuesday.

The abbreviated petition filed in U.S. Bankruptcy Court in Kansas City, Kan., listed assets of $512.9 million and liabilities of $447.4 million.

The filing was not unexpected. Brooke has been in a downward spiral for months, with lenders calling in their loans and Brooke's insurance franchisees complaining about not receiving commissions.

The Chapter 11 filing came a day after Brooke special master Albert Riederer announced that two Kansas businessmen had offered to buy Brooke's insurance operations for an undisclosed price.

Doug Schmidt, an attorney for Riederer, said Tuesday that Brooke sought Chapter 11 protection because it was unable to meet its financial obligations as they came due.

"If you've got a buyer, most buyers prefer to buy something out of bankruptcy court, where they get more protection," he said.

Brooke and its 30 or so affiliates are part of a once-rapidly expanding network of independent insurance agencies founded by Robert Orr in 1986. The companies for many years financed the acquisition of the agencies, managed their repackaging and financed their resale to new owners. The companies also repackaged and resold the loans used to finance the acquisitions as securities to Wall Street investors and to groups of mostly small Midwestern banks.

Earlier this year, citing deteriorating credit market conditions, Brooke effectively shut down the lending operations, cut back support offered to franchise owners and began reducing the size of its network.

At one time, there were about 900 franchisee- and company-owned locations across the country. There are now about 250.

Last month Brooke consented to the appointment of Riederer as special master to run the company after it was sued by Bank of New York Mellon, which accused Brooke of fraudulently diverting funds. Riederer, a former Jackson County prosecutor and appeals court judge, has laid off dozens of Brooke employees at its headquarters in Overland Park and its support offices in Phillipsburg, Kan., in north-central Kansas near Nebraska.

Trim Creek LLC, an affiliate of an Illinois bank that also sued Brooke after Brooke defaulted on loan payments to the bank, now owns 44.26 percent of Brooke's stock. The stock was pledged as security for the loan.

Joining Brooke Corp.