Bankruptcy judge to approve US Fidelis settlement - KMOV.com

Bankruptcy judge to approve US Fidelis settlement

ST. LOUIS (AP) -- A federal bankruptcy judge rejected Missouri's objections and said he would sign off on a proposed settlement in the bankruptcy case of a company that claimed to be the nation's top marketer of auto-service contracts.
   The St. Louis Post-Dispatch reports that U.S. Bankruptcy Judge Charles Rendlen III's planned approval of the deal involving US Fidelis comes as federal investigators continue probing whether the company committed any criminal wrongdoing.
   US Fidelis filed for bankruptcy in St. Louis in March beneath a cloud of accusations that it used illegal telemarketing ploys and sold worthless warranties. Bankruptcy documents suggest that its owners, brothers Darain and Cory Atkinson, used company money to maintain lavish lifestyles for themselves and their families.
   As part of the deal, the Atkinsons would pay about $10.5 million and surrender possibly $10 million more in assets. The brothers' wives would keep $500,000 apiece -- along with jewelry, clothes and household items -- but be barred from turning those assets over to their husbands.
   Assets surrendered would go into a fund that then could be tapped by US Fidelis creditors and customers who agree not to sue the brothers. The potential amount of that fund remains unclear, largely because the surrendered assets -- including 10 residential properties, many bought or built at the height of the real estate bubble -- are difficult to value.
   The settlement plan does not call for US Fidelis to recover about $1.1 million the brothers have paid to retain criminal-defense lawyers.
   Neither the brothers nor US Fidelis have been charged with any crime, though the company has acknowledged it is sharing financial details with federal prosecutors.
   The settlement applies only to the lawsuit US Fidelis filed against the brothers in April, accusing them of stripping the company of at least $101 million through high salaries, cash distributions and the company spending that kept them living in luxury.
   The judge called the ongoing federal probe "the giant monster that people seem to ignore," making it critical for creditors to secure the Atkinsons' wealth before the money is spent on additional legal fees or seized by prosecutors.
   Missouri Attorney General Chris Koster is suing US Fidelis and the Atkinson brothers for violating consumer-fraud and telemarketing laws. He also objected to the settlement deal, arguing that the wives of the US Fidelis owners would get to keep too much money, and that the deal would shield the brothers from further lawsuits.
   Rendlen rejected those claims.
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   Information from: St. Louis Post-Dispatch, http://www.stltoday.com
   (Copyright 2010 by The Associated Press.  All Rights Reserved.)
 

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