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:
- 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
- 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, firstname.lastname@example.org and to her counsel at email@example.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.
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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
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MARCH 1, 2018 WEBINAR VIDEO – Investor & Creditor Forum
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