Suit Filed in US Fidelis Bankruptcy Case

more+
less-

In the bankruptcy case of US Fidelis auto service provider, a lawsuit has been filed to limit the amount to be awarded to Chicago-based Mepco Finance Corp. who other creditors say is making unfair claims on the $25 million bankruptcy estate of the Wentzville firm. If the suit succeeds at limiting the take of Mepco Finance, more money could go to other creditors that include hundreds of disgruntled customers who have filed claims and state attorneys general seeking restitution for tens of thousands more. Still other creditors are consultants who were owed hundreds of thousands of dollars in fees for trying to keep US Fidelis afloat, as well as potentially hundreds of former employees who were not given sufficient notice when they were laid off.

US Fidelis had their telemarketers sell allegedly worthless auto service contracts when customers revolted en mass triggering the bankruptcy. Mepco Finance was left with the bulk of the bad debts to the tune of $57 million. As Mepco was the only secured creditor of US Fidelis, the company naturally applied to be first in line to collect the money Fidelis owes it.

But a committee was formed among the unsecured creditors claiming that Mepco should not be paid anything because the finance company was party to the fraudulent scheme that was run by Fidelis. The lawsuit charges that Mepco was a willing partner in a faulty business model that they should have known was based on fraud and could not be sustained.

Please see full article below for more information.

LOADING PDF: If there are any problems, click here to download the file.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Tampa Bay Bankruptcy Center, P.A. | Attorney Advertising

Written by:

more+
less-

Tampa Bay Bankruptcy Center, P.A. on:

JD Supra Readers' Choice 2016 Awards
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
×
Loading...
×
×