© 2015 The Texas Lawbook.
By Natalie Posgate
(Jan. 20) – Seven weeks after an unfavorable $46.9 million final judgment, Waco-based Life Partners Holdings, Inc. filed for Chapter 11 bankruptcy protection.
Fort Worth attorney Robert Forshey of Forshey Prostok, who represents Life Partners in bankruptcy court, could not be immediately reached for comment. Fort Worth bankruptcy Judge Russell F. Nelms oversees the case.
Life Partners decided to pursue the Chapter 11 restructuring, which was filed in the U.S. Bankruptcy Court for the Northern District of Texas, as a means of protection as it appeals the $46.9 million judgment against U.S. Securities and Exchange Commission.
The Dec. 2 final judgment followed a jury trial last year that cleared Life Partners of insider trading and fraud claims, but still sided with the SEC’s allegations that two top executives of the life insurance investing company violated securities laws by filing misleading financial statements.
In a press release, Life Partners said the SEC had filed a motion with the federal trial court to appoint a receiver for the company, so Life Partners decided to seek protection under Chapter 11 to avoid the appointment of a receiver that could have caused liquidation of the company. Life Partners will seek its own appointment of a chief restructuring officer.
The SEC is not the only party to bring claims against Life Partners. The company is facing similar allegations in state court. Because of the state litigation, the Supreme Court of Texas heard last week the issue of whether life settlements should be regulated as securities.
More details on the bankruptcy filing can be found in Bloomberg’s article here.
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