EMERGENT CAPITAL, INC. (NYSE:EMG) Files An 8-K Other Events
Item 8.01Other Events.
On January 25, 2019, Emergent Capital, Inc. (the “Company”), White Eagle Asset Portfolio, LP, the Company’s wholly-owned indirect Delaware subsidiary (“White Eagle”), Lamington Road Designated Activity Company (formerly known as Lamington Road Limited), the Company’s wholly owned indirect Irish subsidiary (“Lamington”), and White Eagle General Partner, LLC, the Company’s wholly-owned indirect Delaware subsidiary (“WEGP” and, with the Company, White Eagle and Lamington, the “Plaintiffs”), filed suit (the “Suit”) against LNV Corporation (“LNV'”), Silver Point Capital L.P. (“Silver Point”) and GWG Holdings, Inc. (“GWG” and, with LNV and Sliver Point, the “Defendants”) in the United States Bankruptcy Court for the District of Delaware (the “Court”), where the Suit will be administered together with the previously filed and announced petitions for relief under Chapter 11 of the United States Bankruptcy Code of White Eagle, Lamington and WEGP (the “Chapter 11 Cases” and White Eagle, Lamington and WEGP, the “Debtors”). LNV, a subsidiary of Beal Bank (“Beal”), is the lender under White Eagle’s outstanding revolving credit facility (the “Credit Facility”).
In the Suit, the Plaintiffs allege that the Defendants engaged in a scheme to coerce the Plaintiffs into selling their valuable portfolio of life insurance policies to defendants for well below its true value. to the Credit Facility, LNV agreed to lend $370 million to White Eagle, and in connection therewith received a 45% equity stake in White Eagle. That equity stake, and LNV’s significant control over White Eagle under the Credit Facility, creates a joint venture, and gives rise to fiduciary duties to White Eagle and Emergent, on the part of LNV. The Plaintiffs further allege that LNV has been engaged in a concerted campaign to “squeeze” White Eagle and Emergent by improperly restricting their cash flow, in the hopes that White Eagle and Emergent will have no choice but to sell the valuable policy portfolio to LNV or one of its proxies, including Silver Point and/or GWG, at below its true value.
The Plaintiffs seek, among other things, (i) economic damages and (ii) to have the Credit Facility recharacterized as equity rather than debt or, in the alternative, to have LNV’s 45% equity stake in White Eagle declared to be unmatured interest on the outstanding loan from LNV under the Credit Facility, which should be disallowed through the effective date of any plan of reorganization of White Eagle.
In connection with the White Eagle Chapter 11 Case, on January 15, 2019, the Court authorized the Debtors to use the proceeds of prepetition cash collateral for a period of twenty (20) weeks (the “Cash Collateral”). The Cash Collateral may be used solely for the purposes permitted under the budget approved by the Court, including (i) to provide working capital needs of the Debtors and general corporate purposes of the Debtors, (ii) to make the payments or fund amounts otherwise permitted in the final order that authorized such uses and such budget, (iii) to fund amounts necessary to pay certain fees; and (iv) to fund amounts necessary to pay certain professional fees in accordance with such Budget.
On January 29, 2018, the Company issued a press release relating to the suit, a copy of which is attached hereto as Exhibit 99.1.
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Item 9.01 |
Financial Statements and Exhibits. |
EMERGENT CAPITAL, INC. Exhibit
EX-99.1 2 emgc_lawsuitdrafpressrelea.htm EXHIBIT 99.1 Exhibit Emergent Capital Files Suit Against Beal Bank Subsidiary Claim alleges scheme to coerce sale of valuable portfolio of life insurance policies below its true valueBoca Raton,…
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About EMERGENT CAPITAL, INC. (NYSE:EMG)
Emergent Capital, Inc., formerly Imperial Holdings, Inc., is a specialty finance company that invests in asset classes, primarily life settlements. The Company, through its subsidiary companies, owns a portfolio of approximately 630 life insurance policies (life settlements). The Company purchases individual policies and portfolios of life insurance policies and manages those assets based on actuarial and market data. The Company provides customized liquidity solutions to owners of illiquid financial assets in two markets, which include life finance and structured settlements. The Company focuses on lending to outright purchases of portfolios, to tertiary trades, as well as individual secondary market purchases. The Company invests in short and long-term life settlement investments.