Life Partners Inc. Exits Bankruptcy, Begins Returning Assets to Investors

WACO, Texas, Dec. 13, 2016 (GLOBE NEWSWIRE) -- H. Thomas Moran, II, the Chapter 11 Trustee for Life Partners Holdings Inc. (LPHI), today announced that the Joint Plan of Reorganization sponsored by Moran and the Official Unsecured Creditors’ Committee became effective on December 9, 2016. As a result, Life Partners has emerged from bankruptcy as a reorganized enterprise designed to maximize recovery for investors.

“This is a momentous day for the investors in Life Partners as it means they will now begin recovering a substantial amount of their original principal investments,” said Moran, a highly regarded expert in the life insurance industry who was appointed as Trustee in March 2015 by the U.S. Bankruptcy Court for the Northern District of Texas. Moran is the president and CEO of Asset Servicing Group, LLC, a pioneer in life settlement portfolio management as the first independent third-party servicer of life insurance policies purchased on the secondary market.

U.S. Bankruptcy Judge Russell F. Nelms entered an order last month confirming the Joint Plan. That order authorized a series of transactions that culminated in the company’s exit from bankruptcy on December 9th.

“Within the next two weeks, distributions of more than $100 million collected from matured policies during the bankruptcy proceedings will be distributed to investors,” said Moran. “Going forward, we project that investors will receive roughly 90 percent of their invested capital over time as a result of the plan we were able to put in place – depending on the option they elected.”

The Court-approved reorganization plan preserved the Life Partners $2.4 billion portfolio of life insurance policies, which includes approximately $1.4 billion of investor capital still at risk. The plan created two new entities: the Position Holder Trust and the Creditors’ Trust. The Position Holder Trust, which will be headed by Eduardo S. Espinosa, of Dykema Cox Smith in Dallas, will oversee the liquidation of the policy portfolio and distribution of the net proceeds to investors. The Creditors’ Trust, which will be headed by Alan M. Jacobs, of AMJ Advisors, will pursue litigation arising from the Life Partners’ pre-bankruptcy business activities, for the benefit of Life Partners’ investors.

The Joint Plan allowed investors to select among various options for the recovery of their capital, including options that enable them to avoid exposure to any future financial commitments or to tie their future returns to individual policies still active in the company portfolio.

“We anticipate a seamless transfer to the new trusts and new servicer, as well as effective oversight from the five-person board of directors comprised of both investors and seasoned industry professionals with expertise in life settlement transactions,” said Moran.

In December 2014, the U.S. Securities and Exchange Commission (SEC) secured judgments against Life Partners and its senior executives totaling more than $46.8 million for engaging in “serious violations” of the securities laws that “deprived the investing public of the information it needed to make a fully informed decision about whether to invest in Life Partners.” That judgment prompted the company’s former management team to put the company in bankruptcy in the Northern District of Texas (Fort Worth Division, Case No. 15-40289-RFN-11).

The Life Partners bankruptcy case raised a number of highly complex issues surrounding the maximization of the value of the policy portfolio and the restructuring of its business enterprise.

Moran applauded the efforts of the professionals and firms involved for having achieved this important milestone. In addition to David Bennett, Richard Roper and Katharine Clark of Thompson & Knight LLP, who represent Moran, he cited the important contributions of other members of his team including: Sheri Townsend of Asset Servicing Group; Kim Hinkle of Kim Hinkle Law; Dawn Ragan of Bridgepoint Consulting; William Schuerger and Randy Williams of Thompson Knight LLP; Vince Granieri of Predictive Resources; and Melvin McVay of Phillips Murrah.

The Official Committee of Unsecured Creditors was represented by Joseph Wielebinski, Dennis Roossien and Jay Ong of Munsch Hardt Kopf and Harr. Vida Capital provided the exit financing for the transaction and will act as servicer for the Life Partners policy portfolio and investors.

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