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November 10, 2008

321 Henderson Under Review By Standard & Poors... A Side Issue Highlights Marketplace Identity Confusion

by Structured Settlement Watchdog

Standard and Poors announced October 7, 2008 that it was "reviewing information pertaining to recent orders of the California Superior Court in Fresno County California to determine the potential impact on structured settlement transactions (sic)".

The review by Standard and Poors is and of itself significant  BUT the side issue of market place confusion caused by entities (or individuals) such as 321 Henderson and other NASP members and others (such as NSSTA member Patrick Hindert's "fantasy" structured settlements 3.0), that ultimately leads a rating agency like S&P to mischaracterize the 321 Henderson transactions as "structured settlement transactions" AND is evidence of how widespread the branding problems are for the structured settlement industry.

321 Henderson is well known as one of the JG Wentworth companies. The Fresno Rulings refer to cases in which the court found that various structured settlement factoring companies  (S&P mischaracterizes as structured settlement companies) failed to comply with the California Structured Settlement Protection Act and questioned the validity of numerous previously approved  court -approved assignments of structured settlements to these companies.  Please note that the "assignments" in the S&P report refer to "assignment of periodic payment rights" NOT "qualified assignments". The Fresno Rulings are being appealed.

"Cash Now Pusher" 321 Henderson purchases structured settlement payment rights from tort victims at a discount and then packages them together through securitizations and sells those to investors. These are what S&P is rating. The potentially finanacially devastating implication to investors buying securitizations composed of transactions later deemed to be invalid or illegal needs no further explanation.

S&P is seeking:

  1.  The known exposure concentrations of outstanding receivables that originated out of Califiornia and Fresno County; and
  2.  The historic performnace details of these receivables as of the most recent determination date.

S&P Reviewing Structured Settlement Transactions (sic) After Fresno Superior Court Rulings (click title to access)

With respect to the side issue here are some definitions of key terms that were mischaracterized by S&P in its October 7, 2008 report:

Structured Settlement Company
A company that engages in the marketing and placement of new structured settlement annuities, which are regulated insurance products. Included in the definition of a structured settlement company are companies that have employees or, who have independent licensed life insurance agents and brokers, whose primary business is to place structured settlements. There even once was a structured settlement annuity brokerage firm called "The Structured Settlement Company". The term "structured settlement company" is sometimes used to refer to certain life insurance companies who manufacture or issue new structured settlement annuities. Some settlement transfer companies, settlement purchasers or "cash now" companies, have tried to favorably position themselves by incorrectly using this term. However make no mistake, none of them can truly make the claim that they are a "structured settlement company."

Structured Settlement Factoring Company:

A company that engages in the purchase of the rights to receive future structured settlement payments. A transaction completed by such companies is known under the Internal Revenue Code Section 5891 as a 'structured settlement factoring transaction". Sometimes referred to as a "secondary market company" "settlement purchaser" , "cash now company", "cash flow purchaser", "transfer company" "factoring company" or more recently by the slang "financial crack dealer". Sometimes mislabeled in advertising by such settlement purchasers as a "structured settlement company". Don't be confused!

Structured Settlement Factoring Transaction
Describes a process, defined at IRC 5891(c)(3)(A), which results in the transfer of structured settlement payment rights for a discounted amount of cash. Don't believe the marketing hype! A structured settlement factoring transaction IS NOT a structured settlement transaction.

Structured Settlement Transaction
Describes the transaction embodied in the process of  how structurred settlements work, which results in a structured settlement. Part of a structured settlement transaction involves the placement of a structured settlement annuity contract or alternative periodic payment funding mechanism described under IRC 130(d).

Posted at 04:28 PM in 321 Henderson Securitzation, California Structured Settlement Protection Act, Cash Now Pushers | The "Cash Now Fix", Fresno Cases, JG Wentworth Commentary, Los Angeles CA Structured Settlements, Misinformation about Structured Settlement Factoring, Misinformation About Structured Settlements, Patrick Hindert, Securitization Structured Settlements, Structured Settlement Definitions, Structured Settlement Securitization, Structured Settlement Securitzation, Structured Settlements, Structured Settlements in California, Structured Settlements in Fresno County |

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Guide to Structured Settlements 2023

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  • Treasury Funded Structured Settlements
    Treasury Funded Structured Settlements are a settlement option for the most conservative using the OTHER permissible qualified funding asset under IRC 130(d), United States Treasury Bonds in addition to, or instead of, structured settlement annuities. Treasury Funded Structured Settlements can also be used to fund installment sales, also known as structured sales and other non qualified structured settlements.
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    Use the Taxable Equivalent Yield chart to help compare the Internal Rate of Return (IRR) of a structured settlement to other alternative or complementary investments. Need help with the chart? Call 4structures.com® LLC at 888-325-8640
  • Structured Settlement Payments | Types of Structured Settlements
    Ways You Can Structure Your Settlement Payments. With a structured settlement you can have more than one type of payment in a single contract. Different types of structured settlement payments can be customized and combined to meet your needs on a stand-alone basis, or in conjunction with other financial products. Diversify your structured settlement, if you wish, by funding with more than one annuity issuer, with treasury funded structured settlements, index linked structured settlement payments and market based structured .
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    Structured attorney fees is a financial strategy that offers a unique way to defer taxes for lawyers and law firms. Lawyers CAN structure their legal fees even if the plaintiff doesn't structure their settlement. There are multiple ways to structure your attorney fees, such as the an index linked structured settlement where payments are adjusted based on upside changes in the S&P 500 with no downside and a cap of 5%. Trial Lawyers may also use a special deferred pay/deferred compensation arrangement, if market based returns returns are desired with no cap. Plan NOW for year end! Put structured attorney fee expert John Darer® on your settlement planning team.
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  • What Are Structured Settlement Annuities?
    Structured settlement annuities are annuities that can provide one or more customized annuity payment streams in a single contract. Read about structured settlement annuities here.
  • History of Structured Settlements
    Tracing the roots of structured settlements history from 1918, when Congress exempted damages for personal injury or sickness from income tax, to the establishment of structured settlements as a core personal injury settlement planning tool to the present day.
  • What Are Market Based Structured Settlements?
    Market based structured settlements are an alternative or supplementary structured settlement solution for the plaintiff, attorney or law firm that: 1. Can afford to take some market risk 2. Have discretionary settlement dollars. Claimants and attorneys alike may find that market-based structured settlements provide the opportunity to receive tax-free income, or tax-deferred income, while enjoying growth potential.
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Qualified Settlement Funds

  • What is a Qualified Settlement Fund?
    Qualified Settlement Funds | What You Need to Know
  • Firmwide Qualified Settlement Funds Debunked
    Firmwide qualified settlement funds have been heavily promoted to trial lawyers, but have been debunked in a detailed analysis in a July 2022 legal opinion a tax partner at the law firm of Faegre Drinker Biddle & Reath, LLP. Trial lawyers and firms who have established Firmwide QSFs or coinsidering establishing a Firmwide QSF should read the analysis as part of their evaluation.

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