The last few years have been a rollercoaster for J.G. Wentworth, the financial services firm that injected itself into public consciousness with a series of humorous commercials featuring the catchphrase, ?It?s my money and I need it now!?
Earlier this week Bloomberg reported that the owner of the company, New York private equity firm J.L.L. Partners, has reconsidered plans to auction off the company due to bids falling below the $1 billion asking price. The auction was reportedly handled by Deutsche Bank and Moelis & Co.
The $1 billion price tag is nearly ten times the company?s pretax profit.
The move to sell came after the company entered Chapter 11 Bankruptcy Protection in 2009, citing ?liquidity problems amid a tightening credit market.? The structured settlement company laid off 120 of its 200 employees, and its general corporate bonds were deemed ?almost worthless? by industry insiders during this period.
Less than six months after the layoffs, J.L.L. Partners invested $100 million in the company, and increased its staff to 178.
In 2011, J.G. Wentworth merged with Peachtree Settlement Funding. J.L.L. Partners retained control of both companies. J.G. Wentworth and Peachtree Settlement Funding reportedly control anywhere from 50-75% of the structured settlement market.
The decision to auction off the company came on the heels of several setbacks for the Radnor, PA, company. Earlier in 2012 J.G. Wentworth faced a lawsuit stemming from its acquisition of Peachtree Settlement Funding, alleging that the company was engaging in deceptive trade practices. The point of contention in the suit was that J.G. Wentworth was deceiving customers into believing that it and Peachtree were competing against each other, when in reality the companies were commonly owned and staffed.
One Ripoff Report told the story: the writer?s sister went back and forth between J.G. Wentworth and Peachtree, trying to find the best quote for the sale of her payments. After a while of this, the Peachtree representative told her that the deal Wentworth was offering was a good deal, and that Wentworth was a great company to sell to. A phone call from a different company some time later informed her that Wentworth and Peachtree were the same company, and that a conservative estimate of how much her payments were worth was $22,000 more than what she received from J.G. Wentworth.
?My sister is now in complete shock and depressed to the point where I had to take time off work to be with her during this terrible period.? She writes, ?She paid dearly for this settlement (the wrongful death of her child) and now she feels like she has been victimized all over again by J.G. Wentworth and Peachtree Financial. J.G. Wentworth is clearly using their recent purchase of Peachtree Financial as a means to deceive people just like my sister. I don?t care what they want to call it but it is just plain disgusting and criminal to steal from people who have already suffered terribly already.?
There have also been allegations that the company engages in ?bait-and-switch? tactics with their customers, wherein sales representatives and clients agree to a deal only to have the terms of the deal altered by J.G. Wentworth when the client is locked into the sale. ?One complainant on the Ripoff Report website detailed a situation in which the structured settlement company offered them $58,250 for their payments, had them sign a sales contract, then, just when the client?s court date had been set, informed them that a mistake had been made, and they could only pay them $51,000.
The structured settlement company has also been accused of anti-consumer practices by illegally preventing consumers from selling settlement payments to anyone other than J.G. Wentworth/Peachtree. In November of 2012, a Texas district court ruled against the company?s attempt to prevent a single mother from selling her structured settlement to a company other than Wentworth.
In July 2012 the company was accused of failing to pay Federal excise taxes on $550 million.
J.L.L. Partners paid around $170 billion for a 70% stake in the company back in 2005, which has since increased to 100%.
J.G. Wentworth was founded in 1991 as a merchant bank for the healthcare industry. Their first foray into buying payments was in 1992, when the company began buying auto insurance deferrals. They began focusing on the structured settlement and annuity market in the late 1990s.
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