A federal judge Thursday approved an agreement officially ending part of a conflict between a money management company and a well-known participant in the secondary market for in-force life insurance policies.
The conflict has pitted Ritchie Capital Management L.L.C., Lisle, Ill., against Coventry First L.L.C., Fort Washington, Pa.
Judge Burton Lifland of the U.S. Bankruptcy Court for the Southern District of New York approved the arrangement, which calls for Ritchie to pay Coventry $10 million and for both parties to release claims against each other.
Ritchie filed for bankruptcy court protection in June 2007.
Ritchie initially sought $2 billion in damages in a lawsuit that was dismissed by a federal judge in July 2007.
That suit, which Coventry derided as a “publicity stunt” at the time, accused Coventry of breach of contract and a variety of violations of federal law.
In dismissing the case, the judge allowed Ritchie to re-plead two of its accusations at a later time.
“We view [the approval of the agreement] as a very favorable outcome,” says Lewis Rosenbloom, an attorney in the Chicago office of Dewey and LeBeouf L.L.P., who worked as outside counsel for Ritchie. “It resolves any disputes over our ownership,” of the life settlement contracts involved in the dispute between the two companies he says.
Rosenbloom says the $10 million payment under the agreement also covers several claims made by Coventry, including a debt of $23 million principal plus accrued interest and a number of fees. Those fees relate to marketing and servicing agreements between the two companies, which he says can now be terminated.
But Rosenbloom says the settlement only closes the door on the dispute between the two companies in bankruptcy court. Ritchie still is suing Coventry in district court, Rosenbloom says.
Alan Buerger, Coventry’s chief executive officer, says he is pleased that the newly approved Ritchie agreement “includes significant safeguards to make certain the insureds’ identities remain confidential,” adding that privacy issues are a priority for the company.
“From my point of view, having this issue dealt with in a responsible way by the parties was of paramount importance,” Buerger says.