Life Partners Holdings Files for Chapter 11 Bankruptcy Protection
January 20 2015 - 1:30PM
Business Wire
Life Partners Holdings, Inc. (Nasdaq GS: LPHI), parent company
of Life Partners, Inc., today announced that it has filed a
voluntary petition for relief under Chapter 11 of the United States
Bankruptcy Code in the United States Bankruptcy Court for the
Northern District of Texas (the "Bankruptcy Court") on January 20,
2015. The Company will continue to operate its business as
"debtor-in-possession" under the jurisdiction of the Bankruptcy
Court and in accordance with the applicable provisions of the
Bankruptcy Code and the orders of the Bankruptcy Court. Its primary
operating subsidiary, Life Partners, Inc., will continue to operate
as a life settlement provider.
In connection with the Chapter 11 case, Life Partners Holdings
has also filed for the appointment of a Chief Restructuring Officer
who will oversee the implementation of the Company’s plan for
reorganization.
The Company elected to seek protection under Chapter 11 while it
pursues an appeal of a $46 million judgment against the Company and
two of its executive officers in favor of the Securities and
Exchange Commission as previously disclosed in the Company’s latest
quarterly filing with the Commission.
The Securities and Exchange Commission had filed a motion with
the Federal trial court to appoint a receiver for the Company.
Faced with this possibility and having received no other protection
requested from the Federal trial court, the Company elected to seek
protection under Chapter 11 in order to avoid the appointment of a
receiver which could have liquidated the Company and prevented the
effective prosecution of the appeal.
In connection with the bankruptcy filing, the Company is seeking
customary authority from the Bankruptcy Court that will enable it
to continue to operate and for its subsidiaries to continue to
serve its clients.
As of January 20, 2015 the Company and its subsidiaries had
approximately $18.9 million in assets, including approximately $2.9
million of cash and cash equivalents and approximately $352,000 of
certificates of deposit.
Brian Pardo, CEO of Life Partners Holdings, Inc., stated, "After
careful consideration, the Board of Directors unanimously concluded
that filing for Chapter 11 was the appropriate course of action for
the Company, given the importance of continuing to pursue the
appeal of the final judgment in the SEC’s case as well as the
prosecution and resolution of other pending litigation. We continue
to believe in life settlements as a valuable and attractive asset
class and we remain committed to continuing to serve our clients.
In fact, during 2014, we saw over $71 million paid out to thousands
of LPI clients and over $200 million in payouts since 2001. And, we
expect to see additional payouts in the coming years. This was a
strategic move intended to protect the value of the Company and its
shareholders from the damaging litigation which we believe would
otherwise have destroyed all shareholder value. We look forward to
working towards the successful and prompt emergence of the Company
from Chapter 11."
The Company indicated that it expects to provide additional
details with respect to the Chapter 11 plan of reorganization as
soon as they are available. Such a plan may involve the sale of one
or more subsidiaries of Life Partners Holdings or other Company
assets with Bankruptcy Court approval.
Life Partners Holdings, Inc. is the parent company of the
world’s oldest company engaged in the secondary market for life
insurance, commonly called “life settlements.” Since its
incorporation in 1991, Life Partners, Inc. has completed over
162,000 transactions for its worldwide client base of over 30,000
high net worth individuals and institutions in connection with the
purchase of over 6,500 policies totaling over $3.2 billion in face
value.
Safe Harbor
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995: This news release contains forward-looking
statements as that term is defined in the Private Securities
Litigation Reform Act of 1995. These forward-looking statements
include statements that relate to the intent, beliefs, plans or
expectations of the Company or its management, as well as any
estimates or projections for the outcome of events that have not
yet occurred at the time of this news release. All statements other
than statements of historical fact are forward-looking statements.
All forward-looking statements made by the Company are predictions
and not guarantees of future performance, involve material risks
and uncertainties and are subject to change based on factors that
are difficult to predict and that may be beyond the Company's
control. Such factors include, but are not limited to: those
described under the "Risk Factors" section and elsewhere in the
Company's most recent Quarterly Report on Form 10-Q filed with the
Securities Exchange Commission on January 14, 2015, as well as in
other past filings with the Securities and Exchange Commission; the
risk that the Company may not be able to successfully execute its
strategic steps, including for reasons outside of the Company's
control; risks and uncertainties relating to the bankruptcy filing
by the Company, including but not limited to, (i) the Company's
ability to obtain Bankruptcy Court approval with respect to motions
in the Chapter 11 cases including maintaining strategic control as
debtor-in-possession, (ii) the ability of the Company and its
subsidiaries to prosecute, develop and consummate a plan of
reorganization, (iii) the effects of the Company's bankruptcy
filing on the Company and on the interests of various constituents,
(iv) Bankruptcy Court rulings in the Chapter 11 cases as well the
outcome of all other pending litigation and the outcome of the
Bankruptcy case in general, (v) the length of time the Company will
operate under the Chapter 11 protection, (vi) risks associated with
third party motions in the Chapter 11 cases, which may interfere
with the Company's ability to develop and consummate a plan of
reorganization, (vii) the potential adverse effects of the Chapter
11 proceedings on the Company's liquidity or results of operations,
(viii) the potential adverse effects of the Chapter 11 proceedings
on regulatory and licensing agencies of our primary operating
subsidiary, Life Partners, Inc., and (ix) increased legal costs to
execute the Company's reorganization, and other risks and
uncertainties. The Company cautions that the trading in the
Company's securities during the pendency of the Chapter 11 cases is
highly speculative and poses substantial risks. A plan of
reorganization could result in the Company's outstanding common
stock to be diluted or extinguished and the holders of the
Company's common stock may not receive any consideration.
Accordingly, the Company's future performance and financial results
may differ materially and/or adversely from those expressed or
implied in any such forward-looking statements. You should not
place undue reliance on forward-looking statements. The Company
will not undertake to publicly update or revise its forward-looking
statements even if experience or future changes make it clear that
any projected results expressed or implied therein will not be
realized.
LPHI-G
Life Partners Holdings, Inc.Andrea Atwell,
254-751-7797Shareholder Relationsinfo@LPHI.comwww.lphi.com