US Fidelis Gets Approval for Bankruptcy Plan

A bankruptcy judge approved the plan submitted by US Fidelis to pay $26.5 million to hundreds of thousands of customers of the collapsed firm.

Creditors of US Fidelis viewed the judge’s approval as a victory.

Before its collapse in 2009, US Fidelis sold consumers virtually worthless auto protection plans that cost between $2,000 and $4,000.

Under the plan, the company’s largest creditor, Mepco, which funded their protection plans, will receive $6 million. Mepco originally sought $58 million and loaned the company millions more after they declared bankruptcy.

Fourteen million of the settlement funds will go to a consumer -restitution fund to be distributed by state attorney’s generals.

Three consumers from California who were planning to file a civil action lawsuit objected to the settlement, citing that immunity from civil suits extended to the businesses that worked closely with US Fidelis.

Without approval of the plan, prolonged legal battles would have drained US Fidelis’ remaining assets leaving little left for creditors.

Assistant Attorney General for Texas Hal Morris said of the plan, “It puts the most dollars in the (hands of) the most possible people in the shortest amount of time.”

Bankruptcy is often the only option for troubled businesses. When they are forced to take this route a bankruptcy attorney will work diligently on plan that to satisfy creditors so they can exit the process in a timely manner.

Once a business or individual enters a debt reduction plan, their bankruptcy lawyer will be able to have many of their debts reduced and in some instances dismissed entirely. If you are a business owner that is overwhelmed with debt allow a bankruptcy attorney to evaluate your finances and decide which filing is the best choice for your needs.