No Evidence Of Date Of Receipt Of Disclosure Statement, So Court Rejects Structured Settlement Factoring Transaction

No Evidence Of Date Of Receipt Of Disclosure Statement, So Court Rejects Structured Settlement Factoring Transaction

A proposed transfer of structured settlement payment rights cannot become effective under the New York Structured Settlement Protection Act unless a court has approved the transfer and has found that the transfer is in the payee's best interest and is fair and reasonable.

The court must also find that the transfer meets the requirements of the New York SSPA.New_york[1]

In a recent decision, a New York trial court found that the transfer was not in the payee's best interest and was not fair and reasonable – and also, that there was not enough evidence for the court to conclude that the transfer met other SSPA requirements concerning the timing of the disclosure statement.

The case is captioned In The Matter Of The Petition Of Peachtree Settlement Funding, L.L.C. and Samuel Oladipo, No. 15436/11, 2012 N.Y. Slip Op. 50213(U) (N.Y. Sup. Ct. Jan. 24, 2012), and the lack of information about the date that the payee received the disclosure statement was significant in the court's conclusion that there was insufficient evidence to make a finding that the disclosure statement requirements had been met:

[New York] General Obligations Law ("GOL") § 5–1703 [a subsection of the New York SSPA] requires that, prior to a payee signing a transfer agreement, the transferee must provide written disclosure setting forth, inter alia, the aggregate amount of the payment, the discounted present value of the payment, the gross advance amount, itemization of fees to be deducted, and the net advance amount that will ultimately be paid to the payee.  The statute mandates that the disclosure be provided to the payee "not less than ten days prior to the date on which the payee signs a transfer agreement."  Furthermore, the disclosure must be provided to the payee by "first class and certified mail, return receipt requested or United States postal service priority mail."

Turning first to the notice requirements of GOL § 5–1703, petitioner claims that it provided the disclosure statement "not less than ten (10) days prior to the date on which Payee executed the transfer agreement by regular mail and certified-mail return-receipt requested and/or postal office priority mail . . . ."  Petitioner has failed to provide any proof that it mailed the disclosure statement to Mr. Oladipo via any of the aforementioned methods.  Although the disclosure statement is dated ten days prior to the date that the purchase contract was executed, the affidavit of Mr. Oladipo fails to state the date upon which he received and signed the disclosure statement.  Because petitioner has not submitted proof of mailing, the Court is unable to determine whether the statutory time requirements have been satisfied.

The court denied and dismissed the petition seeking court approval of the transfer.

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