Montgomery Credit Card company, Advanta Corporation is in liquidation leaving thousands of its investors, mainly from the older age bracket, in a quandary over their lost investments. Many of its investors bought its much publicized investment notes that promised 9% interest even though it does not have Federal Deposit Insurance Corporation (FDIC) coverage.
In total, Advanta owes 3,400 investors some $138 million as at November last year when it filed for Chapter 11 impoverishment. To help alleviate its monetary burden, the company plans to sell its chattels that are no longer needed, among which are two limos, two early 1990s Mercedes Benz sedans and a 1997 Porche 911 Carrera. Since May 2009 it had already ceased issuing new credit cards. It may also sell its collection of modern art paintings valued at $4.3 million and draw from other material goal, such as receivables from subsidiaries but they are of uncertain value. Furthermore, its chief executive office, Dennis Alter has failed to find new business streams for the compamy.
Advanta also owes institutional investors some $96 million although the company considers this of lower priority matched up to to the amount on due to individual investors. In the days when business was still booming, Advantas main asset was the backing of a Utah bank that issued Advanta credit cards. But the bank itself got into fiscal trouble with losses arising from defaulting loans to small businesses. The FDIC has ordered the bank to wind down its operations since July last year leaving little for Advanta investors to hope for.
According to the bankruptcy filing, Advanta has some $98 million in cash reserves. This would amount to a payback of about 42 cents per dollar owed to the two classes of creditors. But this does not take into account the cost of filing for economic failure and other intrinsic costs. As it stands, two ruin legal firms have billed the company for $180,000 for their work since the November 8 filing.
What may have caused Advanta to get into the fiscal set back they are in now? Among the many reasons might be because its chief executive officer Dennis Alter made some doubtful decisions. For example, he built a 38,000-square-foot house in Whitemarsh Township and donated $15 million for a building at Temple University.
What comes next for all the investors and creditors of Advanta Corporation remains to be seen. But if you are in a similar circumstances, consider insolvency as one of your decisions in getting out from under the pecuniary burden you are shouldering. Call us at (813) 200 4133 or toll free (800) 965 5074 for a free consultation. We are an expert group of Tampa attorneys who specialize in economic failure filings.
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