UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________

 

FORM 8-K

_____________

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): April 28, 2015

_____________

 

LIFE PARTNERS HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

 

Texas 0-7900 74-2962475

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

 

204 Woodhew

Waco, Texas

76712
(Address of principal executive offices) (Zip Code)

 

Registrant’s telephone number, including area code: (254) 751-7797

___________________

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):

 

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 
 

 

Item 7.01Regulation FD Disclosure.

 

On April 28, 2015, the Chapter 11 Trustee of Life Partners Holdings, Inc., H. Thomas Moran II (the “Trustee”), released the FAQ set forth on Exhibit 99.1, which is incorporated by reference herein and supersedes the FAQ released by the Trustee on April 7, 2015. In addition, on April 28, 2015, the Trustee sent the letter attached as Exhibit 99.2, which is incorporated by reference herein, to the position holders of Life Partners, Inc., a wholly-owned subsidiary of Life Partners Holdings, Inc.

 

Limitation on Incorporation by Reference:

 

In accordance with general instruction B.2 of Form 8-K, the information in this Item 7.01 is hereby furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section.

 

Item 9.01Financial Statements and Exhibits.

 

(d)Exhibits.

 

99.1LPHI Trustee Website FAQ
99.2LPI Position Holder Letter

 

 
 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  LIFE PARTNERS HOLDINGS, INC.
   
Date: April 28, 2015 By:  /s/ Colette Pieper
    Colette Pieper
    President and Chief Executive Officer

 

 
 

 

INDEX TO EXHIBITS

 

Item

Exhibit 

 
     

99.1

LPHI Trustee Website FAQ

 
99.2 LPI Position Holder Letter  

  

 



 

Exhibit 99.1

 

LPHI Trustee Website FAQ

 

April 28, 2015

  

The Trustee has compiled the following list of the most frequently asked questions (FAQs) received from life settlement position holders and other parties that have an interest in the Life Partners Holdings, Inc. (LPHI) bankruptcy proceeding. Please review the list, and if your question is not addressed directly, please send your questions to questions@lphitrustee.com. Additional questions will be compiled and, as answers become available, they will be included in future FAQs.

  

Life Settlement Policy-Related Questions:

 

1.Is the Trustee continuing to administer the policies in the ordinary course of business?

 

Yes.

 

2.Are other life settlement fractional position holders paying premiums?

 

Yes. Premium contributions generally are regularly being made, and it does not appear that abandonment levels have materially changed in the past sixty days versus the prior year.

 

3.What happens if I don’t pay my premiums?

 

This creates a risk of policies lapsing.

 

4.Are the premium notices I receive correct?

 

The Trustee is undertaking a thorough evaluation of Life Partners, Inc.’s (or LPI, which is LPHI’s operating subsidiary) premium notice practices, as well as the methods LPI used to determine premium notice amounts.

 

Thus far, the Trustee’s investigation has shown premium payments have been either paid to the insurance carrier or placed with the escrow company.

 

5.Is the Trustee going to obtain updated or accurate life expectancies for insureds?

 

At this time it would be cost prohibitive to obtain new life expectancies (LEs) for every policy. Some updated life expectancies may be obtained on a case-by-case basis, but at this time there is no plan to update all life expectancies.

 

 

Page 1 of 4

 

 
 

 

6.Are the Dr. Cassidy LEs accurate?

 

In the SEC’s lawsuit, the District Court found that there was ample evidence that the LEs projected by Dr. Cassidy were short.

 

7.If the Dr. Cassidy LEs are not accurate, then should I conclude that my life settlement interest is worthless?

 

No. The proper valuation of a life settlement involves many factors. While LPI has been criticized for undue reliance upon Dr. Cassidy’s projections, there are other means of underwriting life settlements that have broad support in the industry.

 

8.Are the insureds under the policies still living?

 

The Trustee is reviewing the insured records and the tracking practices of LPI at this time. If any information becomes available indicating that an insured has passed away, LPI will continue its usual practice of pursuing the death benefit claim.

 

9.Can position holders still list their fractional positions for sale or purchase on the LP Market?

 

No, at this time the LP Market is suspended. The Trustee is continuing his review of LPI’s resale practices and fees.

 

Bankruptcy-Related Questions:

 

10.Why was the bankruptcy initiated?

 

Prior to the appointment of the Trustee, LPHI stated that it filed for bankruptcy in order to continue its business during its appeal of a judgment entered against it in connection with a lawsuit brought by the Securities and Exchange Commission.

 

11.Has anything changed at Life Partners, Inc. (LPHI’s operating subsidiary known as LPI) since LPHI went into bankruptcy?

 

Yes. Senior management has changed. After LPHI went into bankruptcy, the Court was asked to appoint a Trustee over the company. In the course of the hearings concerning that request, senior management voluntarily took a reduced role. Then, after the Court appointed a Trustee, other members of senior management were removed from control and the members of the board of directors resigned.

 

12.Where can I obtain more information regarding the bankruptcy?

 

Updates regarding the bankruptcy proceedings will continue to be posted to www.lphitrustee.com.

 

 

Page 2 of 4

 

 
 

 

13.What changes has the Trustee made to LPI’s business operations?

 

The Trustee has suspended tertiary sales of fractional positions for various reasons. The Trustee is still evaluating whether any additional changes should be made to the business operations.

 

14.How will LPHI emerge from bankruptcy?

 

LPHI will have to submit a plan to the court to address the claims of its creditors as provided for in the United States Bankruptcy Code. The Bankruptcy Code provides specific requirements for such a plan and a specific procedure for disclosing the terms of the proposed plan to all creditors, for soliciting votes on the plan, and for a hearing concerning whether the plan should be confirmed.

 

15.How is the Trustee being compensated?

 

The Trustee is paid from funds in the bankruptcy estate. His compensation and that of any counsel or other professionals he may retain is subject to the oversight of the Bankruptcy Court and the United States Trustee’s Office.

 

16.How can I contact the Trustee regarding the bankruptcy?

 

Questions may be sent directly to the Trustee at questions@lphitrustee.com. Please direct questions concerning operational issues such as premiums and billings to LPI Customer Service representatives. Your questions and comments are very helpful to the Trustee as he, his team, and the company work to move LPHI through the bankruptcy process.

 

17.I own shares of stock in Life Partners Holdings, Inc. (LPHI). Why can I no longer trade this stock on the NASDAQ?

 

NASDAQ notified LPHI in January and February that it was not meeting certain requirements for the listing of its stock on NASDAQ. These deficiencies included: (1) the market value of publicly held shares of LPHI dropping below the required minimum of $5 million for thirty consecutive days; (2) failure to disclose in a timely manner the imposition of the monetary sanctions imposed on the company in the case SEC v. LPHI et al.; and (3) the bid price of LPHI stock dropping below the minimum bid price of $1 per share for the previous 30 consecutive days. In addition, NASDAQ determined that the former executive officers of LPHI filing false and misleading financial statements with the SEC and the history of misconduct by LPHI’s former executive officers constituted public interest concerns that were part of the basis for delisting the stock of LPHI. A hearing was scheduled with NASDAQ for March 19, 2015.

 

After the Trustee was appointed, he reviewed the deficiency notices and evaluated LPHI’s ability to satisfy the deficiencies as required, and determined it was in the company’s best interest to withdraw its appeal of the delisting and canceled the March 19th hearing. As a result, NASDAQ halted trading of LPHI stock on March 30, 2015.

 

 

Page 3 of 4

 

 
 

 

Once it is delisted, LPHI’s stock will no longer be traded on NASDAQ and will not be immediately eligible to be quoted on the OTCQX, OTCQB or OTCPink markets. There is no guarantee that LPHI’s stock will ever be eligible to be quoted on such markets or traded on any other market.

 

Official Unsecured Creditors Committee-Related:

 

18.Has an Official Unsecured Creditors Committee been appointed in the case?

 

Yes. The chairman of the committee is:

 

Bert Scalzo

 

Email:   BertScalzo2@gmail.com

 

Please contact Mr. Scalzo with any questions and concerns you may have.

 

 

Page 4 of 4

 

 

 



 

Exhibit 99.2

 

H. Thomas Moran II

LPHI Chapter 11 Trustee

8225 Central Park Drive

Waco, TX 76712

 

April 28, 2015

 

Dear LPI Position Holder:

 

I was appointed Trustee of Life Partners Holdings, Inc. (“LPHI”) on March 13, 2015. This letter is the first of many communications you will likely receive from me as I work to maximize the estate and reorganize the business of LPHI in the coming months.

 

By way of background, Life Partners Holdings, Inc. filed for Chapter 11 bankruptcy protection on January 20, 2015. After many days of hearings in the bankruptcy court in Ft. Worth, TX, the judge ruled in favor of the Securities and Exchange Commission’s motion to appoint a Trustee. One of the purposes of a Trustee, among the many, is to serve in a capacity that seeks to protect all of the “parties in interest” to a bankruptcy proceeding. In this case, there are well over 20,000 such parties, including you, the position holders in the life settlement policies that Life Partners Inc. (“LPI”) facilitated.

 

I have extensive experience in the management of other life settlement and viatical companies in the face of hardship. Having worked with thousands of fractional position holders like yourself, I understand how distressing this situation is for many of you due to not only the financial burden this may be for you, but also the uncertainty a legal action like a bankruptcy may cause. It is my goal to preserve your interests, reduce financial obligations and to provide you with information on an ongoing basis. However, please remember, this will not be a simple process and will take some time.

 

Undertakings

 

Since being appointed Trustee, I and a team of professionals have been at the LPHI / LPI offices in Waco, TX. The work being performed includes:

 

·Securing data and documentation,

 

·Reviewing and analyzing day-to-day business operations,

 

·Reviewing and analyzing accounting practices, finances and budgeting,

 

·Reviewing and analyzing active litigation,

 

·Reviewing and analyzing possibilities for future litigation that may help to maximize the bankruptcy estate, and

 

·Exploring potential financing opportunities.

 

Additionally, we have sought to reduce operating expenses as much as possible without endangering the performance of LPI’s responsibilities.

 

Communications

 

Keeping each of you informed and responding to questions as quickly as possible is very important to me. With over 22,000 position holders, one challenge I face with respect to communication is that it is simply not possible for me to take calls from each of you and perform the tasks required of me. For information regarding your account and / or the policies in which you hold positions, please continue to refer to your account information on the LPI website or to call LPI’s Customer Service department.

 

Website: www.lpi-policies.com (Call Customer Service for login and password if you don’t know it.)

Customer Service Phone Number: 800-368-5569

 

 
 

 

It is critical that we have on file email addresses for all LPI position holders. If we do not have an up-to-date email address for you, please call Customer Service at the above number or email us at CustSrv@LifePartnersInc.com. Alternatively, you may log in to www.lpi-policies.com and provide us with your email address through this website.

 

For more general information, especially regarding the bankruptcy, please refer to the FAQs (Frequently Asked Questions) posted on the website referenced below. If you have a question that is not included in a FAQ, please send an email or a letter with your question to me at the address below. The questions will be compiled and included in the next FAQ. Please direct all correspondence to:

 

Tom Moran Email address: questions@lphitrustee.com
LPHI Trustee www.lphitrustee.com
8225 Central Park Drive  
Waco, TX 76712  

 

The meeting of creditors has been scheduled for Friday, May 1, 2015 at 10:30 a.m. Fritz G. Lanham Federal Building in Ft. Worth, TX at 819 Taylor Street, Room 7A24. At this meeting you will be provided with more information regarding the LPHI bankruptcy proceeding and the work being performed as part of the Trusteeship.

 

Platform and Services Fee

 

Even though budget cuts have been made, Life Partners continues to require funds in order to provide the policy servicing functions that keep the policies in force. Therefore, after considering all reasonable alternatives, it is necessary to bill the next ministerial service fee for that purpose, and I am enclosing that fee statement with this letter. You can see from the enclosure that, unlike the prior billing, this statement covers the fees for a six-month period (September 2014 through February 2015) as opposed to a year. The annual base fees have been significantly reduced. The revised formula for calculating the fee is as follows:

 

Base fee: $75 annually for each position holder

Fee per position: $2 monthly ($24 annually)

 

Please remit your payment to LPI Financial Services. A return envelope is included for your convenience.

 

With Best Regards,

 

H. Thomas Moran II, Trustee

 

 

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