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JG Wentworth breach

We have covered the behemoth J.G. Wentworth extensively here at Einstein Structured Settlements. From guest writers who wanted to share their experiences positive and negative to corporate headquarters and going public news we have become one of the leading sources for background information on secondary structured funding and factoring companies based in America.

A recent court case that involed the Radnor, Pennsylvania company took place in the Delaare Chancery Court because two of the original founders of the company wanted to receive an additional $35 million dollars because of a previous agreement for tax receivables. The suit and breach was brought forth by a Michael Goodman and Gary Veloric. The companies new control took place in 2011 after the Peachtree Settlement Solutions merger that led to another change in control just two years later that the now publicly traded company JGWPT denied as a material change and thus was granted by the courts. 

The courthouses opinion stated: “Plaintiffs have failed to state a claim for breach of contract because they have not alleged facts establishing a change of control that would give rise to liability under the plain and unambiguous terms of the TRA”

Michael and Gary the co-founders and at one time executives at the company were entitled to receive money that was derived from tax benefits due in the future. They created this back in 2007 as part of a future public offering. The payments were to be received 10 years after the tax receivable agreement but their doubts were soon casted.

Rules of the "TRA" state that a material change of control can happen in 1 of 4 scenarios. Changes in board members, voting shares & control. With a change in control at the helm as co-plainiffs they stand to gain approximately 35 million dollars but if there are no changes then they have the possibility of receiving nothing at all. 

This lawsuit started exactly one year ago this month in 2013. The breach of TRA lawsuit after changes of control took place and doubts were placed on whether or not they would actually get paid out by JG Wentworth for the money that they feel was owed to them. The change in control is certainly noticeable from the merger and acquisition of Peachtree in 2011 and finalized with the company going public on the NASDAQ last year.

Directors of the company still were active at the time of going public and thus create the issue of whether or not the changes are constitutional or not. 

Skadden Arps one of the worlds biggest law firms is being represented by the defendents side and the plaintiffs are using Richards Layton & Finger PA.

For more court information you can pull the public files by looking up the court docket and case named: Veloric et al. v. J.G. Wentworth Inc. et al., case number 9051-CB, in the Court of Chancery of the State of Delaware.