Imperial Holdings (NYSE: IFT) seems to have a dark cloud hovering over its Boca Raton, FL offices. Since going public back in 2011, the company has been plagued with legal problems, shareholder turmoil and increased competition in the marketplace. In addition, their stock is currently trading at $2.87, 73% less than its 52-week high.
According to a press release by competing structured settlement factoring company RSL Funding, LLC, Texas courts have rejects Imperial Finance’s repeated attempts to stifle competition. RSL claims that Imperial sought to prohibit customers from receiving competitive bids for their structured settlement payments. The facts surrounding the case as well as the April 24th press release could not be confirmed.
In a recent amended SEC filing, Opportunity Partners is demanding to inspect and copy records in order to determine the value of their shares. Opportunity Partners also wants to determine if there is any corporate waste and assess the performance of Imperial’s officers.
According to the filing, Opportunity Partners is requesting the following:
- Invoices and records relating to the total amount of expenses incurred to date in connection with any internal investigations commenced since September 27, 2011.
- Minutes of any board or committee meetings in which possible or actual wrongdoing by anyone employed by or connected with Imperial was discussed.
- Documents relating to the anticipated total cost of the internal investigations or their anticipated completion date.
- Documents relating to the cost of defending the shareholder class action complaints.
- Documents relating to Imperial's current cash balance.
This filing came the day after, Bulldog Investors, filed a “preliminary proxy statement containing contested solicitations” to hold a special meeting to change the amount of board members, elect five new directors and make alterations to the current bylaws.
Previously, Bulldog Investors demanded the resignation of two independent directors from Imperial’s board. Imperial announced on March 19th that they could not file their annual report due to their inability to value their assets because of the FBI raid in September. The raid was due to an investigation by the U.S. Attorney’s Office for the District of New Hampshire. As a result of the raid, shareholders filed class action securities fraud lawsuits against them.
Imperial Holdings signed a severance agreement with CFO and Chief Credit Officer Richard O’Connell Jr. on February 15, 2012. O’Connell will receive his base salary for 24 months and additional bonuses. The company announced that they are a target of a SEC investigation in connection with the company’s premium finance business.
In January, Jonathan Neuman took a leave of absence from his duties as COO and President.
Imperial Holdings had previously announced that the investigation was into its life settlement business not its structured settlement business. Imperial has denied any wrongdoings and no other company officials besides Neuman are being targeted in the probe.
Boca Raton, FL—On March 21, 2012, Bulldog Investors submitted an Amended Statement of Beneficial Ownership for Imperial Holdings, LLC (NYSE: IFT). The enclosed documentation contained a letter from Philip Goldstein of Bulldog Investors detailing the latest in Imperial’s shareholder saga.
As previously reported on March 2, 2012, Bulldog Investors sent a letter to Imperial Holdings about their ongoing cash drain from their massive legal spending. In addition, the letter wanted at least two independent directors to resign from Imperial’s board to be replaced with directors who had significant ownership.
On March 9, 2012, Michael Altschuler, Imperial's General Counsel replied to Bulldog Investors stating the board was not able to provide a response. As a result, on March 14, 2012, Bulldog Investors served Imperial with a complaint filed in Palm Beach County compelling the company to hold its annual meeting.
Imperial announced on March 19, 2012, that they could not file their annual report and would have to reschedule the annual meeting.
In the most recent Bulldog Investments letter, Goldstein states that they believe the cancelation of the annual meeting is an attempt by the “independent directors to delay their inevitable ouster.” The letter also informs the company that their affiliate Opportunity Partners. L.P., plans to nominate the following directors to the board Antony Mitchell and Jonathan Neuman, the two interested directors, and Gerald Hellerman, James Chadwick, Richard Dayan, Andrew Dakos, and Phillip Goldstein to be independent directors.
In addition, the plan to introduce a proposal stating that any settlement between Imperial and a government agency for more than $1 million needs to be ratified by Imperial’s shareholders.
Currently Jonathan Neuman is on a leave of absence from the company and Antony Mitchell has been assuming his duties. No announcements regarding Neuman’s return as well as Imperial’s legal troubles or their shareholder class action lawsuit at this time.
Imperial Holdings (NYSE: IFT) has announced it cannot file its annual report on time because it was unable value its assets, according to South Florida Business Journal. The Boca Raton based company has been under investigation by the FBI, who raided their offices in September. This investigation is hindering their ability to establish a fair value for the insurance premium loans.
Also the SEC is investigating Imperial for possible securities fraud violations for their alleged misrepresentation to life insurance carriers. Until the company is able to resolve their legal issues and determine a value of their assets, they stated that they will not be able to file its annual report.
Imperial has cancelled its annual shareholder meeting and has not scheduled a new date because of the annual report filing delay. As a result Opportunity Partners has filed a lawsuit against them demanding that they hold the meeting. Recently, NY based Bulldog Investors sent a letter demanding the resignation of two members from Imperial’s board. If the shareholder meeting happens, a vote on the appointment of new directors could take place.
Imperial denies the allegations and the structured settlement business is not under investigation.
In addition to the FBI and SEC investigations, Imperial is facing numerous shareholder class action suits and has seen two major investors bail on them.
CFO and Chief Credit Officer Richard O’Connell Jr. signed a severance agreement with the company on February 15, 2012. President and COO, Jonathan Neuman, a target of the FBI investigation, took a leave of absence from the company back in January.