Bankrupt US Fidelis settles suit and provides payouts to creditorsJuly 18, 2012 12:01 pm Leave your thoughts
Investor lawsuits can become very complicated and business owners often prefer to settle these suits outside of court. However, settlements can get tricky and obtaining legal advice from lawyers for business may prove beneficial.
The complications of settlements is clearly seen in the case against the bankrupt US Fidelis. The company is looking to settle the claims by repaying creditors and customers that alleged the firm sold them worthless vehicle protection coverage. However, a clause in their settlement is causing problems, according to St. Louis Today. The clause protects another company, which financed customer purchases of vehicle service contracts, from civil lawsuits. This is problematic because a number of plaintiffs have been considering filing suit against the secondary company.
US Fidelis went bankrupt in 2009 when it couldn't repay millions of dollars and lawsuits mounted against it, bringing poor publicity to the company. The founders of the company – Darain Atkinson and Cory Atkinson – have pleaded guilty to charges of state and federal crime and are awaiting their final sentencing.
The Atkinson brothers turned their fortunes over to the bankrupt estate under a deal that prevents civil lawsuits being filed against them. However, deciding how the money will be divided among the plaintiffs is no simple task. The bankruptcy proceedings have lasted more than two years and creditors have considered to disregard some claims made by companies that allegedly aided the fraudulent activities of US Fidelis.
Nonetheless, a federal judge signed off on a settlement that would compensate the company's customers and investors through a $26.5 million payout.
"Because it would cost more than $1 billion to reimburse all US Fidelis customers, state attorneys general, who are managing the restitution fund, will decide who is eligible and how much they’ll get," the news source stated.
Companies looking to settle – or prevent – an investor related lawsuit may want to speak to Phoenix business attorneys with real-world business experience.
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