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The Bankruptcy StrategistFeaturesBanking and Finance LawsBankruptcyLJN Newsletters

Reflections on the Life Partners Holding Inc. Bankruptcy

By H. Thomas Moran, II
November 02, 2017

Many bankruptcy practitioners are at least somewhat familiar with the highly publicized proceedings involving Life Partners Holdings Inc. (LPHI), a company that sold fractional ownership interests in life insurance policies — referred to as life settlements. This case was as complex as any of us could imagine and, as the Trustee appointed to manage this bankruptcy, I had a front-row seat.

There were roughly 22,000 individual investors with $1.4 billion of investor capital still at risk, and a $2.4 billion portfolio of life insurance policies that needed to be preserved. In fact, the LPHI reorganization process was so arduous that, at one point in the proceedings, it prompted the following remark from U.S. Bankruptcy Judge Russell F. Nelms: “We're writing on a clean sheet here. There has never been a case like this, a bankruptcy case like this, in the history of our country. Not one. And what happens here makes a difference.”

Now that the dust has settled and the company has exited bankruptcy, I'd like to share some of the important lessons we learned in this case that may prove helpful to practitioners in future bankruptcy cases of this nature and magnitude.

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