Standard & Poors has downgraded from a B to a CC rating the debt obligation of Peach Holdings, Inc. "CC" is defined as "highly vulnerable" by Standard & Poors.
S&P has stated that “If Peach is unable to close on a new facility for its life settlements business, we believe the company could suffer from severe liquidity constraints in the near term”.
S&P also indicated that Peach is aiming to "close a $100 million deal for the purchase of life settlement contracts."
Peach's website describes Peach as "the holding company for a group of leading US specialty factoring companies, including Peachtree Settlement Funding, which allow recipients of future cash flows to obtain an immediate lump sum in exchange for all, or a portion of, those future sums. Peach Holdings caters to people seeking to sell structured legal settlements, annuity payments, lottery prize payments, sweepstakes awards, life insurance policies and tobacco transition payments."
A few questions:
- Since Peachtree Settlement Funding is known to be a servicer of structured settlement payments (see The Real Truth About Servicing Settlement Quotes blog, April 22, 2008, by Andrew Cravenho), what happens if Peach goes belly up? How does that affect the payments being "serviced"? This author has published several posts on this issue and has written to the NSSTA Board and several structured settlement industry leaders to put them on notice about servicing and this very question.
Given the recent JG Wentworth Chapter 11 and now the downgrade of the credit quality of Peach to "highly vulnerable, these are VERY LEGITIMIATE CONCERNS that need to hit the light of day
- How can Peach holdings be "hitting the skids" on ratings when for years it has had the reputation for bloated discount rates? WHERE THE HECK DID ALL THAT MONEY GO?
That's right folks step right up and see the bloated discount! (see in Re Application of Settlement Funding, LLC (d/b/a Peachtree Settlement Funding) Florida Circuit Court 0702660CI013 March 2007 (see page 4 pf the linked .pdf, paragraph 12(h)
Also New York Judges Getting It Done
- Should judges now require Peachtree Settlement Funding and others to certify that they has reserves to back up its factoring deals? Thanks to the "CT Lady saga" and Structured Asset Funding we've already seen what can happen