Securities & Exchange Commission v. Platinum Management (NY) LLC, et al.

Platinum Receivership


On July 1, 2020, Melanie L. Cyganowski, the court-appointed equity receiver (the “Receiver”) for certain entities commonly referred to as “Platinum Partners” (collectively, the “Receivership Entities”) entered into two settlement agreements:

  1. A settlement agreement with (i) CNO Financial Group, Inc. (“CNO”), Bankers Conseco Life Insurance Company (“BCLIC”), Washington National Insurance Company (“WNIC”), 40|86 Advisors, Inc. (“40|86 Advisors,” and collectively with CNO, BCLIC and WNIC, the “CNO Defendants”) and (ii) BRe WNIC 2013 LTC Primary, BRe WNIC 2013 LTC Sub, BRe BCLIC Primary and BRe BCLIC Sub, as represented by Wilmington Trust, N.A., in its capacity as their former custodian (collectively with the CNO Defendants, the “CNO Parties”); and
  2. A settlement agreement with Senior Health Insurance Company of Pennsylvania (“SHIP”) and Fuzion Analytics, Inc. (“Fuzion,” and together with SHIP, the “SHIP Parties”).

On July 1, 2020, the Receiver filed a motion (the “Motion”) in the United States District Court for the Eastern District of New York (the “District Court”) requesting approval of the settlement agreements. The Motion, attached to which are the settlement agreements, can be found by clicking here. Any opposition to the Motion must be (i) made in writing; (ii) if by a party, electronically filed with the District Court; or (iii) if by a non-party, electronically mailed to the Receiver at her email address, platinumreceiver@otterbourg.com and to her counsel at eweinick@otterboug.com, so as to be actually received no later than July 17, 2020.

As set forth in more detail in the Motion, one of the primary obstacles to the successful completion of the receivership and formulation of a plan of liquidation and distribution is more than $79 million (principal amount) of secured debt (the “ecured Debt”) allegedly owed by receivership entity Platinum Partners Credit Opportunities Master Fund LP (“PPCO”), and guaranteed by certain of its subsidiaries, to a group of secured noteholders (the “Noteholders”) for which BAM Administrative Services, LLC (“BAM Admin”) is agent. For reasons more fully explained in the Motion and summarized in the section below entitled “Beechwood Litigation,” the Receiver had commenced an earlier action against certain of the Noteholders seeking to, among other things, avoid the Secured Debt in the United States District Court for the Southern District of New York (Rakoff, U.S.D.J.) (the “SDNY Court”).

After over a year of litigation and months of hard fought, arm’s length negotiations, the Receiver reached a settlement with both the CNO Parties and the SHIP Parties in which PPCO and more than sixty subsidiaries of PPCO would receive, among other consideration, satisfaction of more than $44 million of the Secured Debt (principal amount) owned by SHIP, BCLIC, WNIC and Beechwood Bermuda International Ltd. (“BBIL”), and extinguishment of a total of 38 proofs of claim filed by BCLIC, WNIC, SHIP and Fuzion in the receivership in exchange for, among other consideration, a total payment of $14 million ($4.5 million of which will be paid into escrow and used, if needed, to indemnify PPCO for claims based on alleged Secured Debt of three other Noteholders, which Noteholders failed to file their own proofs of claim), and dismissal of her claims against the settling defendants and certain other parties.

The Receivership Entities would also exchange general releases with the CNO Parties and the SHIP Parties, BBIL, its parent Beechwood Bermuda Ltd., their affiliate, Beechwood Re Limited and certain other Beechwood Parties other than BAM Admin in its capacity as “Agent” for the Noteholders (subject to certain exceptions described in the Motion).

SHIP, BCLIC, WNIC, BBIL and BAM Admin would also execute documents that would permit the release of more than $6.3 million currently being held in an escrow account (the “ALS Escrow Account”) containing the proceeds of the sale of certain life insurance policies previously owned by indirect PPCO subsidiaries ALS Capital Ventures LLC and ALS Life Holdings LLC (together, “ALS”) enabling the Receiver to use and/or distribute those funds as described in the Motion.

As set forth in the Motion, one of the driving forces behind the settlement is the Receiver’s recognition that if she were unsuccessful in avoiding the secured claims of the Noteholders in the SDNY Action, then all of the assets of the Receivership estate, which are worth less than the $44 million of outstanding principal amount of the Secured Debt owned by those creditors, will likely be consumed by the Secured Debt, leaving nothing for unsecured creditors and investors.

Based on the forgoing, and as described in detail in the Motion, taking into consideration the merits of the claims and the risks, uncertainties, and expenses associated with the SDNY Action, and the potential amount that might or might not be recovered from a judgment, the Receiver’s decisions to enter into the settlement agreements and to utilize funds of PPCO and ALS for the settlements are fair and reasonable and a sound exercise of the Receiver’s discretion and business judgment for the Receivership Entities and their subsidiaries.



December 11, 2019 WEBINAR VIDEO – Investor & Creditor Forum


August 14, 2019 WEBINAR VIDEO – Investor & Creditor Forum

RECEIVER’S STATEMENT ON JURY VERDICT IN CRIMINAL TRIAL

July 11, 2019

We are aware that many of you have been closely following the criminal trial of Mark Nordlicht, David Levy and Joseph SanFilippo, and have questions as to how the verdicts in that case may impact the Receivership. The Receivership was established with Mark Nordlicht’s consent in the civil enforcement case brought by the Securities and Exchange Commission titled SEC v. Platinum Management (NY) LLC, et al., case No. 16-cv-06848 (E.D.N.Y.) (BMC). Unlike the criminal trial, it is a civil action which will, at a certain point, be resolved before Judge Cogan. Our role is to administer the Receivership. We are not involved in either the prosecution of the criminal case by the Department of Justice or the advancement of the civil litigation by the SEC. The Receiver will continue her work as governed by the Court Orders, and will continue to provide updates on her progress.

March 12, 2019 WEBINAR VIDEO – Investor & Creditor Forum

December 4, 2018 WEBINAR VIDEO – Investor & Creditor Forum

AUGUST 15, 2018 WEBINAR VIDEO – Investor & Creditor Forum

JUNE 6, 2018 WEBINAR VIDEO – Investor & Creditor Forum


DECEMBER 20, 2017 WEBINAR VIDEO – Investor & Creditor Forum


MARCH 1, 2018 WEBINAR VIDEO – Investor & Creditor Forum

DECEMBER 20, 2017 WEBINAR VIDEO – Investor & Creditor Forum

Key Documents

Learn more about the Settlement by downloading the documents below.

Beechwood Litigation

To access the Beechwood Litigation Case Docket, please click below:

On March 29, 2019, Melanie L. Cyganowski, the Court appointed receiver for certain funds commonly referred to as Platinum Partners (the “PPCO Funds”), through her counsel Otterbourg P.C., filed an amended complaint in the United States District Court for the Southern District of New York against, among others, (i) certain so-called Beechwood entities, (ii) Senior Health Insurance Company of Pennsylvania, (iii) Fuzion Analytics, Inc., (iv) CNO Financial Group, Inc., (v) Bankers Conseco Life Insurance Company, (vi) Washington National Insurance Company and (vii) 40|86 Advisors, Inc. Click here to read the amended redacted complaint in the action captioned “Melanie L. Cyganowski, as Equity Receiver for Platinum Partners Credit Opportunities Master Fund LP, et al. v. Beechwood RE Ltd., et al.” now pending as Case 1:18-cv-12018 in the United States District Court for the Southern District of New York. As is fairly standard in similar cases, the Receiver exercised her right under the applicable rules and orders of the court to amend the originally filed complaint.

The Receiver’s amended complaint seeks redress for the innocent investors and creditors of her estate damaged by the defendants’ unlawful and tortious acts. The Receiver alleges that through their creation of Beechwood, a purported independent reinsurance entity, the Platinum insiders expanded a pre-existing fraud that personally enriched them through the generation of millions of dollars in management fees, incentive fees, false profits and other remuneration over the years.

Certain of the defendants named in the Receiver’s amended complaint are alleged to have substantially assisted, and participated with, Beechwood and the Platinum insiders to commit fraud and breach their fiduciary duties to the PPCO Funds. Specifically, these defendants – acting through Beechwood – structured and implemented a series of transactions that ultimately saddled the PPCO Funds with approximately $69.1 million of debt owing to Beechwood, as agent for the insurers, secured by liens on substantially all of the PPCO Funds’ assets, including those of nearly all of their portfolio companies, in consideration for assets that were worth a fraction of that amount.

For these reasons, the Receiver asserts causes of action for, among other things, (i) violations of the Racketeer Influenced and Corrupt Organizations Act and/ or federal securities fraud; (ii) aiding and abetting common law fraud; (iii) aiding and abetting breach of fiduciary duty; (iv) actual and constructive fraudulent conveyances; and (v) unjust enrichment. In addition to monetary damages, the Receiver seeks to avoid the first-priority liens asserted against PPCO Funds’ assets by certain defendants which may otherwise adversely impact potential distributions to investors and creditors.

The Receiver will update her website, http://www.platinumreceivership.com/index, with developments in the case and will address investor/ creditor inquiries regarding the suit at her next Town Hall meeting, the date and time of which have not yet been scheduled but which will be announced on the Receiver’s website. Any questions or concerns in the interim should be submitted via email to platinumreceiver@otterbourg.com.

Protocols for Parties in Interest to Be Heard on Receiver Motions

Case Information

RECEIVERSHIP ENTITIES
Platinum Credit Management, L.P.
Platinum Partners Credit Opportunities Master Fund L.P.
Platinum Partners Credit Opportunities Fund (TE) LLC
Platinum Partners Credit Opportunities Fund LLC
Platinum Partners Credit Opportunity Fund (BL) LLC
Platinum Liquid Opportunity Management (NY) LLC
Platinum Partners Liquid Opportunity Fund (USA) L.P.
Platinum Partners Liquid Opportunity Master Fund L.P.
Platinum Partners Credit Opportunities Fund International Ltd.
Platinum Partners Credit Opportunities Fund International (A) Ltd.

CASE NUMBER
1:16-cv-6848 (BMC)(VMS)

COURT
United States District Court for the Eastern District of New York

JUDGE
Judge Brian M. Cogan

DATE FILED
December 19, 2016

LC ENERGY CLAIMS BAR DATE
March 4, 2019 at 5:00pm (ET) - See Notice of Proposed Sale in Key Documents section or Click Here for more info.

LEGAL COUNSEL TO RECEIVER
Otterbourg P.C.
230 Park Avenue
New York, NY 10169
Phone: 212-661-9100
Fax: 212-682-6104
Attention: Adam C. Silverstein
Erik B. Weinick

FINANCIAL ADVISOR TO RECEIVER
Goldin Associates LLC
350 Fifth Avenue
The Empire State Building
New York, NY 10118
Phone: 212-593-2255
Fax: 212-888-2841
Attention: Marc Kirschner
William Edwards

RELATED CASES
1:16-cr-00640-BMC USA v. Nordlicht et al
1:16-cr-00640-BMC-1 Mark Nordlicht
1:16-cr-00640-BMC-2 David Levy
1:16-cr-00640-BMC-3 Uri Landesman
1:16-cr-00640-BMC-4 Joseph Sanfilippo
1:16-cr-00640-BMC-5 Joseph Mann
1:16-cr-00640-BMC-6 Daniel Small
1:16-cr-00640-BMC-7 Jeffrey Shulse

Docket Items for the above cases can be located at the PACER portal for the Eastern District of New York, located here.

Bar Date

The Court has established the following dates by which claims by non-investor creditors against the Receivership Entities must be filed:

(i) 5:00 p.m. (prevailing Eastern Time) on March 29, 2019 as the deadline for Claimants other than Governmental Units to submit Proofs of Claim against the Receivership Entities; and

(ii) 5:00 p.m. (prevailing Eastern Time) on April 12, 2019 as the deadline for Governmental Units to submit Proofs of Claim against the Receivership Entities.

The Bar Date Order can be viewed here.

The Proof of Claim Form, which includes instructions for filing a claim, can be downloaded here.

The Notice of the Bar Date can be viewed here.

DEADLINE for filing a claim against LC ENERGY only: March 4, 2019 at 5:00pm (ET). For additional information on how to file a claim, see Notice of Proposed Sale of LC Energy and Establishment of LC Energy Claims Bar Date In Connection Therewith and Order Authorizing the Receiver to Sell the Receivership’s Rights in LC Energy and Establishing LC Energy Claims Bar Date in Key Documents section for more information.