by John Darer CLU ChFC MSSC RSP CLTC
Patrick Hindert apparently needs better reading glasses. The Executive Director of The Settlement Services Group inexplicably refers to the potential bankruptcies of annuity service companies as "structured settlement bankruptcies" in a summary of attorney Bruce Akerly's presentation at the National Association of Settlement Purchasers (NASP) about annuity servicer bankruptcies.
A structured annuity servicer, typically a factoring company only comes into play when an annuitant wishes to sell some, but not all, of their structured settlement payment rights. Because certain life insurance companies allegedly refuse to dice or split payments the entire payment goes to the servicing company which does the "slicing an dicing", takes its cut and pays the annuitant the difference.
"Structured Settlement Bankruptcies - Bruce Akerly summarized his recent paper titled "The Impact of an Annuity Servicer's Bankruptcy on the Annuitant and Structured Settlement Purchaser". Akerly's conclusions:
- "The annuity payments received by a structured settlement servicing company, as well as the servicing agreement itself, become property of the bankrupt estate"; and
- "It may be possible to draft provisions in the servicing agreement to anticipate some of the consequences of the servicing company entering bankruptcy and perhaps lessen the impact on all parties."
As the structured settlement industry has already seen with the Scott Rothstein saga, mislabeling has a potentially deleterious effect on public perception of structured settlements given that the misinformation will be indexed on the Internet for some time to come.
Note: Underline added by this author for emphasis
Watch John Darer's 3 part Legal Broadcast Network video podcast on Structured Settlement Servicing, which includes an interview with Bruce Akerly. Darer's interview with Akerly occurred in October 2009, the month prior to the presentation of the paper that Hindert commented on.