(Bloomberg) – Life Partners Holdings Inc., which buys rights to life insurance death benefits and sells them to investors, filed for bankruptcy protection as it seeks to avoid legal claims including a $46 million judgment against it and its chief executive officer.
A subsidiary, Life Partners Inc., will continue to operate, Waco, Texas-based Life Partners said today in a statement distributed by Business Wire. The filing will also help the company avoid a Securities and Exchange Commission move to appoint a receiver, which could lead to a liquidation and make an appeal of the judgment impossible, the company said.
“The company elected to seek protection under Chapter 11 while it pursues an appeal of a $46 million judgment,” according to the statement.
CEO Brian Pardo and another officer were ordered to pay penalties after a federal jury ruled in December that the company filed false and misleading statements with the SEC.
The Chapter 11 filing, in Fort Worth, Texas, listed debts of as much as $50 million. Life Partners and its units have $18.9 million in assets, including $2.9 million of cash and cash equivalents, according to the statement.