Suit Filed in US Fidelis Bankruptcy Case


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.

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